news aggregator

Will genuine monetary union be a fiscal or stability union?

EU Active - 2 January, 2014 - 16:11

Before Christmas (19th-20th December), European heads of state and government met in Brussels for the European Council, to discuss plans for a “genuine” Economic and Monetary Union (EMU). But what started as a promising plan appears to have been stripped-down intensively in scope, writes Björn Hacker.

Björn Hacker is a political analyst focusing on European economic policy at the International Policy Analysis Unit of the Friedrich-Ebert-Stiftung in Berlin

The EMU crisis unexpectedly offers, in the face of the possible collapse of the common currency, an opportunity to deepen integration through a banking union, fiscal capacity, common debt management and a social union. This is as clear in the first plans drawn up in June 2012 as in a revised version of December 2012 and the Commission’s Blueprint.

However, within only a few months the proponents of a “stability union”, who are counting on a continuation of the unilateral course of budgetary controls and competitiveness, have been able to dismiss, marginalise or put on the backburner what is compelling about a fiscal union, as well as the opportunities it would offer.

Again and again, specific proposals for improving the EMU architecture founder on fundamentally divergent approaches to the question of joint liability between member states. That applies both to the controversy about the restructuring and resolution mechanism of the banking union and to plans for common debt management or a fiscal capacity for the eurozone.

All that remains is the technocratic elements for gradual adjustments of the existing governance structure. And because, with the European Semester, the Fiscal Compact and other instruments, reshaping what is already in place constitutes the lowest common denominator of member states.

First and foremost, this means: structural reforms, budgetary consolidation, tightened controls and sanctions. The elements of ex ante coordination of economic-policy reforms, direct contractual arrangements between each member state and the EU and financial rewards for faithfully implementing structural reforms by means of a solidarity instrument, which remain for a ‘genuine’ EMU are basically already part of the coordination cycle of the European Semester or at least imaginable.

Now the range of subjects of coordination is to be extended and the compulsory elements of common objectives are to be tightened up. Anything beyond that, which could really contribute to change capable of correcting the barely discussed bias in EU economic governance, is scarcely discernible.

And the urgently needed project of a banking union will never come to fruition unless progress is made in fiscal and political integration.

The last German government was enormously successful in Brussels, suppressing almost everything that did not conform with its model of a ‘stability union’, in which each state helps itself and thus a transnational community cannot emerge. Thus the fiscal capacity has been remodelled into the unambitious solidarity mechanism; the banking union is coming to grief or largely degenerating into mere routine coordination by national authorities; and Community bonds have become a dead letter. On the latter, the Commission produced a green book back in 2011. However, German Chancellor Angela Merkel made her position absolutely clear around the time of the European Council in June 2012 when she said: “No eurobonds as long as I live,” since when the topic has been taboo.

Since the change of government in France, supporters of a ‘stability union’ around Germany, Finland and the Netherlands have encountered stiffer opposition. This is due to the obvious failure of austerity policy.

The attempt by the French government, together with representatives of the European Commission, to shoehorn the social dimension – which was not mentioned until the December summit of 2012 – into the negotiations on ‘genuine’ EMU is commendable and, in principle, correct.

The EU has for too long been perceived solely as a common economic area and positive, market-shaping integration has fallen too far behind negative, market-creating integration. It is thus high time to bolster and further develop the European Social Model. However, this process will miscarry if there is not also a clear correction of the reparation mode that EMU has pursued thus far.

As things stand today and with the current alignment of the instruments of economic governance all social aspects will remain in the shadow of budgetary consolidation and measures to increase competitiveness.

An ex ante coordination of economic policy reforms and contractual arrangements would only exacerbate the dependency of progress in the social realm on financial conditions, thus forcing it to justify itself and cementing the hierarchical subordination of social policy.

The work-in-progress of the European Social Model can continue successfully only if the original plans for a fiscal capacity, common debt management and a completely integrated banking union are realised. Only the consistent correction of the defective Maastricht currency architecture can clear the way for Europe’s social dimension. Unfortunately, there appears to be no prospect of that at present.

This is an abstract of a paper by the author, recently published by Friedrich-Ebert-Stiftung under the Title “On the Way to a Fiscal or a Stability Union? The Plans for a ‘Genuine’ Economic and Monetary Union”

Centenary of Great War stirs bad memories for fractured continent

EU Active - 2 January, 2014 - 13:57

The commemorations this year of the centenary of World War I – still known as the “Great War” (see background) – are likely to reawaken the ghosts of nationalism and highlight stark differences in how Europeans remember the conflict.

Europe was devastated by four years of warfare unleashing the military application of industrial advances, but its nations – whilst equally traumatised by the conflict – remember it differently.

Britain and France, allied through the Triple Entente with Russia, see the conflict as a ruinous but necessary action to forestall the militaristic ambitions of Germany’s “unbalanced” leader, Kaiser Wilhelm II.

Both countries – whose schoolchildren have long been taught to consider the war as resulting in victory for their nations – have organised hundreds of commemorative events and media coverage.

Germany sees the centenary as a chance to promote European integration and arrive at a shared remembrance of the disaster, and is keen to play down national sentiments, in common with its former Triple Alliance partners Austria/Hungary – whose empire collapsed in the aftermath of the conflict – and Italy, which ultimately joined the war on the side of the Entente powers.

In her New Year message, German Chancellor Angela Merkel looked back to the past, though, noting that the year would be the 100th anniversary of the beginning of World War I, the 75th anniversary of the start of World War II and a quarter of a century since the fall of the Berlin Wall.

“This was the beginning of the end of divisions of Germany and of Europe," she said.

At the last EU summit on 19 December Merkel said that she had read the book “The Sleepwalkers: How Europe Went to War in 1914” by Australian historian Christopher Clark.

“They [the European countries’ leaders] failed everything, and this brought World War I," she said. 

Merkel used the historic reference speaking about the divisions among EU countries as a touchstone on how to handle the eurozone crisis. But diplomats told EurActiv that Germany does not want the anniversaries to make the communication between capitals even more difficult.

Some joint events are carefully planned, including a “peace demonstration” on Bastille Day, 14 July, in Paris.

Leaders set to join together for reflection

The presidents of Germany and France, Joachim Gauck and François Hollande, will stand side by side in France on August 3 to mark the start of the war “with gravity and reverence”.

An Anglo-German ceremony is planned the following day in Belgium, invaded by German troops on the first day of the war.

Tensions have simmered below the surface however. UK journalist Max Hastings called on commemorations to be unflinching in their apportionment of blame for the conflict with the Triple Alliance.

Meanwhile in August last year, Norman Walter, press attaché at the German embassy in London, said “it would be easier” for Britain to adopt a “less declamatory tone”.

“The biggest single contribution to the start of the First World War was Germany, but others played a part. Whether it was a win or not, it wasn’t worth it,” he said.

These tensions have been most pronounced in the Balkans, where the collapse of the Ottoman empire combined with Serbian nationalist sentiment to light the touch-paper of the war, with the assassination of the Austro-Hungarian crown prince, Franz Ferdinand, in Sarajevo on June 28, 1914.

Plans for a meeting of leaders of all sides in Sarajevo have had to be dropped due to a lack of international consensus.

Origins, result of the conflict remain sensitive

The Vienna Philharmonic Orchestra is planning to hold a concert in Sarajevo on the anniversary of the assassination, carried out by Gavrilo Princip, a Bosnian Serb and member of the nationalist “Black Hand” group.

Princip’s legacy remains extremely controversial in the Balkans. During the Yugoslav era, he was celebrated as the liberator and streets in Belgrade still bear his name.

Meanwhile Serbian Prime Minister Ivica Dačić last year told media sources he feared that commemorations of the war would "lead again to Serbian people being accused of triggering the biggest armed conflict in the history of humanity". Serbia prefers to lay responsibility for the outset of the conflict squarely with the Austro-Hungarian empire.

The European Commission’s approach to the commemoration reflects the fractured memory of the war amongst its combatant nations, now united within the bloc.

“As such we will not organise commemoration events, as 2014 means very different things to different countries but we do not exclude that the President and Commissioners may attend specific events, if invited,” a spokesman for the EU executive told EurActiv.

Riga and Umeå become this year's capitals of culture

EU Active - 2 January, 2014 - 13:40

Latvia's capital Riga and Umeå in Northern Sweden have been chosen as European Capitals of Culture for 2014.

The 'European Capital of Culture' is considered as one of the most successful and high-profile cultural initiatives of the EU (see background). Every year cities are selected by an independent panel on the basis of a cultural programme. The programme must have a strong European dimension, engage local people of all ages, and contribute to the long-term development of the city.

"The European Capital of Culture has been a fantastic success story for almost 30 years," said Androulla Vassiliou, Commissioner for Education, Culture, Multilingualism and Youth. 

She added that the title offered "a unique opportunity" to make the most of a city's cultural assets and boost its long-term development, with important benefits for tourism and job creation.

The opening of festivities in Riga will include special events at museums, cafes and other venues, as well as exhibitions on Baltic amber and on the impact of the First World War on culture.

Vassiliou and EU Development Commissioner Andris Piebalgs will participate in various events such as the launch of 'Taste and Feel 2014!' which will offer the public a taste of the year's cultural programme.

The launch of Umeå 2014 will take place over the weekend of 31 January to 2 February with the opening 'Burning Snow' ceremony on Saturday as a high point.

The main events will be held on and around the Umeälven River, with a choreographed festival of light, music, song and movement.

"This is the moment that Riga and Umeå have been preparing - and waiting for - since their selection as the European Capitals of Culture. The opening events will mark the beginning of what will be a tremendous year of cultural activities, aimed not only at people from the city and surrounding region, but also at those coming from much further afield," Vassiliou said.

Ukrainians tell Yanukovich: We will be in EU, with or without you

EU Active - 2 January, 2014 - 12:41

“The future of Ukraine lies in our hands, not in yours”, civil society activists told Ukrainian President Viktor Yanukovich in an unusual New Year video message.

More than fifty Ukrainians of all walks of life addressed Yanukovich in a video message, in an unprecedented response to the annual televised message of the head of state.

“Every year it’s the President who addresses the people on New Year’s Eve. But judging from his scarce statements made lately, he has nothing to say. Now it’s the time of the people to speak,” said the authors of the video.

“The future of Ukraine lies in our hands, not in yours. We are Europeans. We will be in the EU. With you or without you,” participants said in the video message.

Since Yanukovych refused to sign an Association Agreement with the European Union in late November, tens of thousands of Ukrainians have taken to the streets of Kyiv and other cities calling for Yanukovych and his government to resign.  

Yanukovych issued a televised message calling for national unity in 2014 after what he called possibly "the most difficult" year in the history of independent Ukraine.

The President even appeared to make appeasing sounds to the protestors, saying that 2013 had been also “a year of progress through Maidans [protest squares] and national roundtable talks, political disputes and honest dialogue".

Yanukovych also said Kyiv would deepen ties with the EU, Russia, and China, and vowed that Ukraine's national interests would not be harmed. "We are continuing to work on an Association Agreement with the EU and we have renewed good, brotherly relations with Russia. We have achieved true progress in our relations with China, we are establishing a balance between the East and the West without giving up our national interests," Yanukovych pledged.

He added that he hoped that the Greek EU Presidency which started on 1 January would help his country sign the Association Agreement (AA) which he himself put on ice last November.

According to Ukrainian media sources, Yanukkovich wrote to the President of Greece Karolos Papoulias, saying: "I hope that the Hellenic Republic will contribute to the further development of cooperation between Ukraine and the EU aimed at the conclusion and effective implementation of the Association Agreement."

It is difficult to say to what extent Yanukovich's EU ambitions are genuine, and whether his statements are not simply an attempt to calm the protests.  

Hours after Yanukovych's address was broadcast on TV, at least 100,000 people sang the Ukrainian national anthem in Kyiv's main square in a show of support for European integration.

Organisers quoted by Radio Free Europe said they were trying to set a world record. Earlier, the leader of Ukraine's opposition UDAR party, Vitali Klitschko, said opposition parties and their supporters will continue their peaceful demonstrations across Ukraine after the winter holidays. Klitschko, who is a former world heavyweight boxing champion, said on 31December that the opposition's next step will be a nationwide strike.

"Our next step - just to remind you that we are peacefully protesting and everything we pursue will be done legally - is to call for a national strike, an all-Ukrainian strike," Klitschko said.

"The first time it will last just for five minutes, then the next time for an hour, then for a day. With this we will demonstrate that we don't want to live or work under this government and by their rules," he said.

An opinion poll published last week by the local Democratic Initiative foundation showed that Yanukovich would lose a second round runoff to Klitschko if presidential elections were held now. The poll also found Yanukovich losing to other opposition leaders including Arseniy Yatsenyuk, leader of the Batkivshchyna, or "Fatherland" party.

Klitschko, who previously announced his intention to run for president in 2015, added that the opposition will have a single presidential candidate.

Europe’s Ukrainian blunder

EU Active - 2 January, 2014 - 11:17

The EU didn’t realise for years that the only motivation of Ukrainian President Viktor Yanukovych in pretending to negotiate an association agreement with the EU was to raise the price that Russia would have to pay to keep Ukraine in its strategic orbit. This EU blunder demands explanation, writes Joschka Fischer.

Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998-2005, a term marked by Germany's strong support for NATO’s intervention in Kosovo in 1999, followed by its opposition to the war in Iraq. This article was first published by Project Syndicate.

“The European Union has probably never experienced anything like it before: Ukrainian President Viktor Yanukovych’s government pretended to negotiate an association agreement, only to back out at the last minute. EU leaders felt duped; in Moscow, however, the mood was celebratory.

As we now know, Yanukovych’s real motivation for the negotiations was to raise the price that Russia would have to pay to keep Ukraine in its strategic orbit. Only a few days later, Yanukovych and Russian President Vladimir Putin announced a Russian loan worth $15 billion, a cut in natural-gas prices, and various trade agreements.

From Yanukovych’s point of view, this agreement made sense in the short run: the gas deal would help Ukraine survive the winter, the loan would help keep it from defaulting on its debt, and the Russian market, on which the economy depends, would remain open. In the medium term, however, by rejecting the EU and embracing Russia, Ukraine faces the risk of losing its independence – on which the post-Soviet order in Europe depends.

In terms of its strategic orientation, Ukraine is a divided country. Its eastern and southern regions (especially Crimea) want to return to Russia, whereas its western and northern regions insist on moving toward Europe. For the foreseeable future, this domestic conflict can be resolved, if at all, only with a lot of violence involved, as the ongoing mass protests in Kyiv suggest. But no sensible person can seriously desire such an outcome. Ukraine needs a peaceful, democratic solution, and this will be found only within the status quo.

The EU’s behavior demands explanation. Yanukovych had always been the Kremlin’s ally. Indeed, his election in 2010 marked the end of Ukraine’s pro-European Orange Revolution, which had defeated his effort to steal the presidential election in 2004 and keep Ukraine in the Russian camp. So why did the EU press for an association agreement, without being able to offer Ukraine anything comparable to what Russia offered?

The answer can be found in the relationship between Europe and Russia. With the collapse of the Soviet Union, Russia not only lost its status as a world power; within Europe, it was forced to withdraw toward a frontier that it had extended westward since Peter the Great – ultimately to the Elbe and Thuringia. After Putin succeeded Boris Yeltsin as President of the Russian Federation, he followed three strategic goals, which he continues to pursue: an end to post-Soviet Russia’s strategic submission to the West; reestablishment of sovereignty over most of the ex-Soviet republics, or at least enough control over them to stop NATO’s eastward expansion; and gradual recovery of Russia’s status as a global power.

These goals were not to be enforced by the Red Army, but by Russia’s economic potential, especially a strategic energy policy supported by vast oil and natural-gas reserves. This would require securing control over these resources. It would also require establishing new export routes to Europe that, by circumventing Ukraine, would make the country vulnerable to blackmail, because a cutoff of gas supplies to it would no longer trouble Europe. The ultimate goal would be to regain Russian control over the Ukrainian pipeline network. At that point, Ukraine could be coaxed into joining Putin’s “Eurasian Union,” a Russian alternative to the EU aimed at keeping ex-Soviet countries within Russia’s sphere of influence.

Apart from using the Nord Stream and South Stream pipelines to disconnect Ukraine from Russian energy exports to Europe, the Kremlin successfully blocked European access to the hydrocarbon-rich Caspian Sea and Central Asia. Virtually the only way that countries like Azerbaijan, Turkmenistan, and Kazakhstan can export their output to the West is via Russia’s pipeline network. The sole exception, the Baku–Tbilisi–Ceyhan (BTC) oil pipeline from Azerbaijan to Turkey, was pushed through by the United States; Europe has done nothing similar.

None of this is exactly a secret in Western capitals; on the contrary, Putin’s ultimate goal – a far-reaching revision of the post-Cold War strategic order in Europe – has become increasingly clear as Russia has moved closer to achieving it. But neither the EU nor the US has been willing or able (so far) to formulate an effective response.

The EU’s Ukraine initiative was supposed to be an attempt to provide such an answer. Europe played for high stakes, because if Ukraine does lose its independence in one way or another, European security will be at risk – a risk nowhere more keenly felt than in Poland and the Baltic states. With Yanukovych’s rejection of the association agreement, the EU has lost its bet.

Putin cannot be faulted for skillfully pursuing his interpretation of Russian interests. The blame for the outcome in Ukraine falls squarely on the EU’s leaders, who represented European interests so badly. Grand gestures and paper-thin statements cannot mask Europe’s neglect of its own strategic interests, which will not be helpful in its relations with Russia. If Europeans want to change this, they will have to invest in their interests and devise an effective approach to ensure that these investments pay off.

This is true not only with respect to Ukraine. At the end of 2013, Russian diplomacy can look back on a year of impressive successes: Syria, the interim nuclear agreement with Iran, and now Ukraine’s rejection of Europe. Whether Europe’s leaders see the connections and understand the consequences remains a serious question. That fact alone gives rise to considerable concern.”

Turkey claims fending off ‘coup attempt’

EU Active - 2 January, 2014 - 10:54

Turkey's government said on 31 December it was fending off a "mini coup attempt" by elements in the police and judiciary who served the interests of foreign and domestic forces bent on humbling the country.

Deputy Prime Minister Ali Babacan said the ruling AK Party had in the past survived military coup plots and attempts in the courts to outlaw it. It would not now yield to a corruption investigation that he said targeted the government but was already damaging the national economy.

"These latest formations in the judiciary and the police, we can't call it a coup, but a mini coup attempt. This is what interests foreign investors," he told broadcaster CNBC-e, echoing suggestions by Prime Minister Recep Tayyip Erdoğan of a foreign interest in the crisis.

"Maybe the clearest indicator of this was the fall in share prices," added Babacan, who is in charge of the economy.

The market value of Turkish listed companies had fallen $49 billion (€35.5 billion) by Monday's market close, he said. The main share index was down 1% on Tuesday.

Erdoğan has, without naming it, accused a movement led by Turkish cleric Fethullah Gülen of creating a "state within a state", using influence in the police and judiciary in a campaign to discredit the government.

The "Hizmet" (Service) movement controls a vast global network of schools and businesses. Tensions have grown between the two former allies over elements of foreign and domestic policy and moves to close his private schools in Turkey.

The graft inquiry became public on 17 December with a series of raids and detentions of senior businessmen close to Erdogan and of the sons of three ministers. Since then, the media hostile to Erdoğan has brimmed with tales of police raiding offices or homes and seizing caches of dollar bills.

President Abdullah Gül, seen as unifying figure who has largely stayed out of the furore, made an appeal for unity in a New Year's message, stressing the importance of a clear separation of powers.

"It is the duty of all of us to avoid attitudes that damage the fact and perception of an independent and impartial judiciary," he said in the message on the presidency website.

Erdoğan's supporters argue the graft accusations have so far lacked any substance and were driven by political ambitions.

"We as the government are on the job," Babacan said. "We created this political and economic stability with our own strength. We will not easily allow someone to come and take it away. However many efforts there were until now trying to shake political stability, we overcame them all."

Army out of politics

Erdoğan has overseen strong economic growth and a period of political stability unmatched in modern times since his AK Party was first elected in 2002.

The current corruption crisis is not the first critical moment for Erdoğan, who created the party with the name AK - a word that in Turkish suggests purity and resistance to the corruption that had tainted older established parties.

Hundreds of senior army officers have been jailed on accusations of plotting to overthrow Erdoğan, who has succeeded in banishing from politics a military that had intervened to topple four governments in the second half of the 20th century.

Hardliners in the judiciary tried in 2008 to impose a ban on the AK Party, a coalition of conservative religious elements, centre-right figures and nationalists that was accused of endangering the country's secular order (see background).

As Babacan was speaking, news emerged of a further resignation from the AK Party. A total of seven MPs have resigned from the AKP since the end of November, five since the 17 December police raids.

There is, however, no sign of any large-scale abandonment of the party which dominates Turkish politics. Erdoğan, playing on his still unrivalled popularity, could even call early elections next year to shore up his position.

Erdoğan has responded to the corruption scandal with the purging of some 70 police investigators and blocked a second wave of investigations. Those targeted some of Erdogan's most ambitious infrastructure projects, including a third Bosphorus bridge and a canal allowing passage from the Black Sea to the Mediterranean, easing traffic on the Istanbul Strait.

Erdoğan, whose popularity held up through a summer of protests against what critics call an increasingly authoritarian style of government, has broadened Turkish influence in the Middle East and Africa with a vigorous business drive, led often by construction projects.

Certainly, this has been to some extent to the detriment of relations with the United States and European Union.

"There is a very significant and broad mass uncomfortable with the position which Turkey has reached in the last 11 years, the advances it has secured, the power it has created in the region, its resonance in the world," Babacan said.

[Review] Big pain for small gain in the eurozone

EU Observer - 2 January, 2014 - 10:40
The past year was better than 2012, at least as far as the eurozone economy is concerned, but not much better.
    

[Ticker] Greece launches EU presidency

EU Observer - 2 January, 2014 - 10:16
Greece on Wednesday took over the six-month rotating EU presidency from outgoing Lithuania. Athens is set to prioritise economic growth, immigration policy and youth unemployment. Severe austerity measures imposed by international creditors have contributed to Greece's six-year recession. It also has the highest unemployment rate in the EU.
    

[Ticker] Croatia arrests ex-spy chief on German request

EU Observer - 2 January, 2014 - 10:09
Croatia on Wednesday arrested former intelligence director Josip Perkovic after Germany issued a European Arrest Warrant earlier last year, reports Reuters. Croatia had initially refused to apprehend Perkovic, sparking legal threats from the European Commission shortly after Zagreb imposed unilateral restrictions on how it implements the EU-wide warrant.
    

[Ticker] Slovakia takes in Guantanamo Bay prisoners

EU Observer - 2 January, 2014 - 10:09
The US on Tuesday released the last three remaining ethnic Uighur prisoners from Guantanamo Bay and sent them to Slovakia, reports the AP. The men had fled China to Afghanistan where they were apprehended by American forces in late 2001 despite having no affiliation with the Taliban or anti-US groups.
    

EU ends funding for Spanish banks, praises austerity

EU Observer - 2 January, 2014 - 09:29
The EU says Spain's banks are back on a "sound footing," but one in four Spanish people are still unemployed.
    

UK vows to control immigration as Bulgaria, Romania curbs end

EU Observer - 2 January, 2014 - 09:29
The UK has vowed to control immigration, as restrictions on Bulgarian and Romanian workers are lifted across the EU.
    

Former Greek minister returns bribes

EU Active - 2 January, 2014 - 09:04

A former Greek government official who admitted taking €13.7 in bribes more than ten years ago to wave through arms contracts, has returned €7 million of the money to the state, the finance ministry said on 31 December.

Antonis Kantas, deputy armaments chief at the defence ministry between 1997 and 2002, was arrested and charged this month after investigating judges found he had €13.7 million euros of unaccounted-for money in a Singapore bank.

Kantas is the first Greek official to openly admit to taking bribes relating to major arms deals with foreign companies from countries including Germany, France, Russia, Brazil and Sweden.

"We are making every possible effort to return the rest of the money in the coming days," his lawyers said in a statement.

Kantas's testimony to investigating judges, in which he names the arms dealers who he says paid him, has led to a wide-ranging investigation in which two men have been charged and will appear in court in the coming days.

Dimitris Papachristos, 78, one of the two charged, was arrested on Monday. His lawyer said on Tuesday that his client would cooperate with the investigation but that he also suffers from serious health problems, including amnesia.

The case has touched a raw nerve among austerity-stricken Greeks, struggling to come to terms with the fact that their country is teetering on the verge of bankruptcy.

Excessive arms procurement is seen as one reason that Greece borrowed so heavily and then had to be rescued with a €240-billion-euro EU-IMF bailout accompanied by strict conditions that have increased poverty and unemployment.

Greece had the highest defence expenditure in the European Union in terms of economic output over the past decade. Its military spending stood at about 4% of gross domestic output in 2009, when its debt crisis started.

Most contracts were awarded to foreign companies.

Athens has already convicted a former defence minister and Kantas's immediate superior for money laundering.

EU tries to calm fears of Bulgarian, Romanian exodus

EU Active - 2 January, 2014 - 09:01

The European Union sought to calm fears in countries like Britain, France and Germany that they face a mass influx of Romanians and Bulgarians following the lifting of restrictions yesterday (1 January), a change that risks fuelling anti-immigrant sentiment in Europe.

From 1 January, seven years after their countries joined the EU, Bulgarians and Romanians are free to live and work anywhere in the 28-nation bloc without applying for work permits.

The long-planned change has caused alarm in wealthier EU countries, where right-wing politicians and media are telling people to brace for a flood of southern Europeans who will take jobs from locals, strain public services and scrounge off the welfare state.

"Benefits Britain Here We Come! Fears as migrant flood begins," said the tabloid Daily Express in a front-page headline on Wednesday.

With continent-wide elections to the European Parliament due in May, the scare about 'benefit tourism' provides ammunition for right-wing parties like France's National Front, the Dutch Freedom Party and Britain's UK Independence Party (UKIP).

Seeking to calm the debate, EU Employment Commissioner László Andor said there were already more than 3 million Bulgarians and Romanians living in other EU states, and ending all restrictions was unlikely to lead to any major increase.

"I firmly believe that restricting the free movement of European workers is not the answer to high unemployment or a solution to the crisis," he said, referring to the EU's lingering economic malaise in the wake of the 2008 global financial meltdown.

Studies have consistently shown the benefits of free movement of workers for the economies of host countries, says Andor in his statement.

“Mobile workers complement host country workers by helping to address skills gaps and labour shortages - in other words they tend not to take jobs away from host country workers,” the Commissioner argues.

'Nasty country’'

The dropping of the curbs was the lead story in nearly all British media on Wednesday, with reporters heading to airports to interview a trickle of people arriving on flights from Bucharest or Sofia.

British Prime Minister David Cameron has rushed out regulations to stop migrants from the EU being able to claim welfare benefits straight away. Under pressure from UKIP, he has said he wants eventually to restrict migrants from poorer EU states relocating to richer ones.

Bulgarian President Rosen Plevneliev has attacked Cameron's proposals, saying they will damage London's global standing for the sake of short-term political gain.

EU Commissioner Andor said in November that Cameron's suggestions risked "presenting the UK as a kind of nasty country in the European Union", a comment that infuriated the prime minister.

In Wednesday's statement, Andor acknowledged that a sudden large influx of people from other EU countries could strain education, housing and social services in particular regions.

But the solution was to "address these specific problems, not to put up barriers against these workers," he said in a statement that did not single out any EU country for criticism.

Andor said that, in hard times, people who went to work in other EU countries were "all too often an easy target", accused of taking jobs from local people or of abusing social welfare.

The European Commission estimates there are around 2 million unfilled job vacancies in the EU, he said.

Because a greater proportion of people who moved to other EU countries were of working age compared to host populations, they were more likely to be employed and were generally net contributors to the welfare system. 

Latvia joins eurozone as euro turns 15

EU Active - 2 January, 2014 - 09:00

Latvia joined the euro zone yesterday (1 January), banking on its experience of austerity to bring it prosperity in a currency union where other economies have floundered. The 2-million Baltic country adopted the common EU currency on the 15th anniversary of the launch of the euro.

The Baltic country of just 2 million people became the bloc's 18th member at midnight (2200 GMT), taking a step further out of the shadow of neighbouring Russia a decade after joining the European Union and NATO.

Latvia's acting prime minister, Valdis Dombrovskis, who led his country through its worst economic crisis since it left the former Soviet Union in the early 1990s, said euro adoption was an opportunity, but not a guarantee of wealth, and the country should not relax its fiscal policy.

"It's not an excuse not to pursue a responsible fiscal and macroeconomic policy," he said after withdrawing the first euro banknote after midnight from a cash machine in Riga.

The euro switchover ceremony took place at a site where Latvia's crisis began - the former headquarters of the collapsed Parex bank, now headquarters of state-owned Citatele bank, which emerged from Parex's ruins.

Parex, the country's second-biggest bank by assets, went bust at end-2008, forcing the Baltic state to seek an international rescue to keep its currency, the lat, pegged to the euro at the same rate.

Its economy shrank by a quarter during 2008-2010, but then grew at the fastest pace in the EU, expanding by 5.6% in 2012, after the government slashed spending and wages and hiked taxes in one of the harshest austerity programs in Europe.

Latvia's efforts have won praise from EU policymakers, who have pointed numerous times to the Baltic state as an example that austerity can work.

"Thanks to these efforts ... Latvia will enter the euro area stronger than ever, sending an encouraging message to other countries undergoing a difficult economic adjustment," European Commission President José Manuel Barroso said on 31 December.

Still, a few concerns remain. The European Central Bank has warned Latvia that the high level of foreign deposits, mostly from Russia, in Latvian banks, as in Cyprus, was a risk factor.

Latvia also enters the euro zone without a permanent government after Dombrovskis resigned in December, taking political responsibility over a supermarket collapse in Riga that killed 54 people.

Latvia enters the euro zone as the single currency bloc marks its 15th anniversary (see background) , and the euro is now used by 333 million Europeans.

Even so, neighbouring Lithuania is the only remaining EU country showing much enthusiasm for euro admission after the temptations and strains of sharing a currency forced Greece, Ireland, Portugal, Spain and Cyprus to seek international bailouts for their government finances or their banks.

Estonia joined the euro zone in 2011, and Lithuania aims to do so in 2015.

Among the ex-Communist EU countries that have yet to adopt the euro, Croatia is stuck in recession while bigger economies such as Poland, the Czech Republic and Hungary have become reticent about currency union.

Latvia, which becomes the fourth smallest economy in the euro zone after Malta, Estonia and Cyprus, expects the euro to lower its borrowing costs and encourage investors by eliminating currency risk.

Both Standard & Poor's and Fitch have raised the country's credit ratings in anticipation of its euro entry.

But opinion polls show ordinary Latvians are divided on the euro's merits, with many worried that its adoption will be an excuse to raise prices.

"In all other countries which had switched to the euro, prices rose. Most likely, they will rise here as well, which is bad," said Oleg Bachurin, 62, a pensioner.

Latvia's central bank expects euro zone entry to lift consumer prices by 0.2-0.3 percentage point in 2014, taking inflation to 2%.

"I'm not worried (about euro adoption). I believe it's progress. We should not look back, we should go forward," said Anita Linde, 57, a retailer.

Croatia arrests former official wanted in Germany

EU Active - 2 January, 2014 - 08:59

Croatia arrested yesterday (1 January) a former intelligence chief wanted in Germany, responding to an extradition row that overshadowed the Balkan state's accession to the European Union last summer.

Josip Perković was one of 10 people arrested, state news agency Hina reported, as an amended law took effect that brought the country's extradition laws into line with most of the rest of the bloc.

He is sought in connection with the 1983 murder of a Yugoslav dissident in Bavaria, allegedly orchestrated by communist Yugoslavia's secret services for which he then worked.

He has denied wrongdoing. His lawyer, Anto Nobilo, told state television HRT that Perković would oppose extradition, saying he did not expect a fair trial in Germany and because he had already been investigated and cleared of all charges in Croatia.

Shortly before joining the EU on 1 July, Zagreb changed its laws to prevent the extradition of suspects in crimes committed before 2002, when new EU extradition rules had taken effect (see background).

The government said it wanted to protect veterans of Croatia's 1991-95 independence war from facing potential prosecution elsewhere in the EU, and denied any connection to the Perković case. Some EU member states have the same 2002 time limit.

But the government removed the time restriction in August after the European Commission warned it could face legal action, including the possible loss of EU funds.

The amended law took effect on Jan. 1 and Hina said that in addition to Perković, police had immediately arrested a second Yugoslav era intelligence chief, Zdravko Mustac, and eight others.

"It is now a matter for the police and the judiciary. The new law is applied equally to everyone," President Ivo Josipović said.

Perković had worked for the communist-era secret service, the UDBA, and led the intelligence service in Croatia after the breakup of Yugoslavia.

His lawyer Nobilo said a local court should rule on whether Perković would be extradited within eight days.

Perković, who could not be reached for comment, said last month he was ready to testify before a Croatian court as soon as the new law took effect.

US send Guantanamo prisoners to Slovakia

EU Active - 2 January, 2014 - 08:59

The United States is sending the three remaining ethnic Uighur Chinese inmates at the Guantanamo Bay detention center to Slovakia, the Pentagon said on 31 December, in the latest of a flow of transfers aimed at eventually shutting the controversial prison.

Yusef Abbas, Saidullah Khalik, and Hajiakbar Abdul Ghuper are the last of 22 Muslim minority Chinese nationals to be moved from the Guantanamo Bay military prison in Cuba, Rear Admiral John Kirby, a Pentagon spokesman, said in a statement.

"This transfer and resettlement constitutes a significant milestone in our effort to close the detention facility at Guantanamo Bay," Kirby said in a statement.

Slovakia's interior ministry confirmed that the central European country will take in the three Uighurs.

The European Union and NATO member first accepted three Guantanamo prisoners in 2010, and the ministry said the latest transfer is a continuation of an EU-U.S. agreement aimed at helping President Barack Obama close the prison.

"As in the first case, this is about transporting people who have never been suspected of nor charged with a criminal act of terrorism," the ministry said in a statement.

Kirby said the United States was grateful to Slovakia for its "humanitarian gesture."

Most of the Uighurs at Guantanamo were captured near the Pakistan-Afghanistan border in late 2001, and were believed to have trained with the Taliban. But U.S. officials have deemed that they pose no threat to the United States.

In 2008, a U.S. court ordered that they be released; some have been resettled in El Salvador, Switzerland, Bermuda, Albania, and the Pacific island nation of Palau.

China has demanded the Uighurs be returned to China, but the U.S. government says it will not do so because they would face persecution there.

Uighurs come from the restive mainly Muslim region of Xinjiang in the far west of China.

Obama has struggled to fulfill his 2009 promise to close Guantanamo detention center, which for many people symbolizes U.S. excesses in the years following the Sept. 11, 2001 attacks. Obama has been blocked in large part due to restrictions imposed by Congress.

Last week, Obama gave Congress credit for relaxing restrictions on transferring detainees from the U.S. prison at Guantanamo Bay to the custody of foreign governments, but said lawmakers needed to go further.

Congress has retained regulations that prevent the transfer of prisoners to American soil, where they could be tried in federal courts.

There are 155 detainees from various countries remaining at Guantanamo, many of them from Yemen. Most of them have never been charged. The administration has recently become more active in making transfers, sending two detainees each to Sudan, Saudi Arabia and Algeria. 

How the Drug War Makes Drugs Less Safe

Ludwig von Mises Institute - 2 January, 2014 - 07:00

The legal incentives created by prohibition lead to artificially restricted production, decreasing the supply, and causing the price to skyrocket. Prohibition transforms users into criminals by making their drug use a large financial burden, enticing many to commit real crimes. All of this is a disaster for the addicts.

Daily Press Summary

Open Europe - 2 January, 2014 - 01:00
Restrictions on Bulgarian and Romanian migrants lifted; German coalition partners in battle over proposals to restrict access to benefits

Agriculture: Increased productivity and a more sustainable food system will improve global food security OECD and FAO publish new Agricultural Outlook

OECD (OESO) - 11 July, 2012 - 10:00
Food commodity prices are anticipated to remain on a higher plateau over the next decade, underpinned by firm demand but a slowing growth in global production, according to the latest OECD-FAO Agricultural Outlook 2012-2021.
Syndicate content