Re: New EC Thread

**Panda** Sun 30 Dec - 5:25

Europe in 2013: economic strangulation and political tension

Compared to 2012, next year for the eurozone will be the difference between being bitten by a poisonous viper and being strangled in the coils of a python, writes Bruno Waterfield.

New EC Thread - Page 26 Catalonia_2438582b

New EC Thread - Page 26 Catalonia_2438582b

Spain, riven by social conflict and the risk of break-up posed by nationalist movements in Catalonia, will be the first to ask for help in early 2013 Photo: BLOOMBERG

By Bruno Waterfield, Brussels

9:00PM GMT 28 Dec 2012

The eurozone last year survived the prospect of sudden death via a Greek exit from the single currency only to face slower strangulation by recession in 2013.

Deep malaise in the eurozone and woes at home, will not help British supporters of the European Union make their case as the 40th anniversary of the country's membership arrives in 2013 coinciding with debate over its future.

A speech by David Cameron, the Prime Minister, will set out his EU strategy later in January on an issue that deeply divides his party and coalition government.

The Europe question has always been divisive.

News archives for 22 January 1973 will commemorate both Sir Edward Heath's signing of the European treaty and the moment following it when a female protester threw ink over him.

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Chances of a break-up for the eurozone receded in 2012 but the fundamental flaws and imbalances in its structure remain, combined with recession and the prospect of a protracted economic slump in Southern Europe.

The crushing economic squeeze will be accompanied by the constant danger that a full-blown crisis will flare up as uncomfortable political and economic realities are repeatedly pushed home throughout the year.

The euro's three biggest economies outside Germany face funding costs of £640 billion (€780bn) in a year when recession is forecast.

France, Italy and Spain, with borrowing costs of €243 billion, €332bn and €207bn respectively will hope that promises of liquidity and bond buying from the European Central Bank will be convincing.

The more convincing the bailouts and bond purchase measures are, the more controversial they will be in countries such as Germany, Finland, Austria and Holland.

Spain, riven by social conflict and the risk of break-up posed by nationalist movements in Catalonia or the Basque country, will be the first to ask for help in early 2013.

Help for Spain, or any other country, will trigger fierce debate (and possible delays) in Northern European creditor countries such as Germany, where elections take place in September.

Aid must first be voted through in German, Finnish, Austrian and Dutch parliaments as political tensions over the huge cash transfers from North to South grow.

Last year, Angela Merkel lost her "Chancellor's majority" on eurozone bailout votes in the Bundestag meaning that she is vulnerable, needing the support of opposition Social Democrats and Greens during an election year.

If unemployment grows in Germany amid a predicted slowdown in euro's largest economy then Chancellor Merkel could face the toxic decision of putting billions of euros into Spain at a time when the German welfare state is under strain.

Italian elections in February could tilt the eurozone back into full-blown crisis amid political uncertainty over the return of Silvio Berlusconi, who in 2011 took Italy to the brink.

As 2012 ended, Mario Monti, the unelected technocrat who restored market confidence in Italy, was still being coy about how, or if, he could return to power.

Embroiled in scandal, Mr Berlusconi has horrified EU leaders with his return to politics and populist tilting at Germanic eurozone austerity policies.

But a divided centre-left, and a vacillating Mr Monti, could put him on track to win, a moment that would trigger market turbulence and push the eurozone back to the brink.

With a general economic slowdown across the Europe and increasing social conflict over austerity programmes the norm, political tensions will rise.

Tensions between Mrs Merkel and Francois Hollande will hobble the eurozone's ability to act as the French Socialist President struggles to cut borrowing and implement domestic unpopular economic reforms with early evidence that France's entrepreneurs are fleeing his high taxes.

President Hollande is likely to be angered by German electioneering that will draw negative comparisons between Germany and France's failure to bite the bullet on economic restructuring.

Meanwhile, the Greek economy is expected to contract by at least a further four per cent in a country where growing anger over austerity imposed by the EU and IMF is a constant threat to stability.

As 2013 unfolds, the failure of EU and ECB forecasts for economic growth in Greece (which have so far been consistently wrong) could unravel the eurozone's survival strategy.

In a bleak analysis of the year ahead, Raoul Ruparel, head of economic research at the Open Europe think tank, concluded that economic stagnation and political uncertainty, with low growth and high unemployment would continue to plague many countries.

"Next year is not only likely to see domestic politics across the EU clash with the economic realities of the eurozone crisis and EU integration, but also countries increasingly being pitted against one another," he said.

After German elections in the autumn, a victorious Chancellor Merkel, whether she is in or out of coalition, is expected to come out fighting for "political union". putting EU treaty change back on the agenda.

Mr Cameron's much-trailed Europe speech, expected in mid-January, will seek to tread a delicate line, promising renegotiation to avoid a Brexit, or British exit from the EU.

The Conservative Prime Minister faces difficult decisions on pulling out of the EU policing measures and fraught negotiations over the size of the Brussels budget next year.

Tense discussions within the Tories, with the anti-EU Ukip on the rise and with the Liberal Democrats in the coalition will mean that the question of an EU referendum will continue to loom large next year.

As 2013 dawns, enthusiastic celebrations of Britain's 40 years of membership are unlikely to be in much evidence outside EU offices in London or the tiny numbers of British "Europhiles".

Next year also brings the 20th anniversary of the entering into force of the Maastricht Treaty that created the euro and the legal concept of EU citizenship.

To mark it, the EU will be celebrating with "European Year of the citizens". But popular rejoicing will be thin on the ground as political tensions grow and unemployment approaches the 30 million mark across Europe.

**Panda** Sun 30 Dec - 17:51

- Sep 10, 2012 3:26 PM GMT+0100

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**Panda** Mon 31 Dec - 9:28

Britain should be offered 'second class' membership of the EU

Britain should cease to be a full member of the European Union under a new deal that would focus on trade, according to senior Brussels politicians.

By Tim Ross, Political Correspondent

9:11AM GMT 31 Dec 2012

An umbrella group of 20 organisations campaigning for a federal Europe suggested Britain should be offered "associate membership" of the EU to prevent the country leaving altogether.

David Cameron is seen as the "continual impediment" to a closer integration of eurozone states, according to the Union of European Federalists.

The plan would see the UK lose all its MEPs, its commissioner in Brussels and its right to veto decisions in the European Council, but remain in the single market.

The Prime Minister is expected to deliver a major speech on his vision for Britain's future relationship with Europe within weeks.

He has promised to fight for a "better deal" for Britain, including taking back a number of powers from Brussels to London.

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Mr Cameron believes that a new EU Treaty is likely to né required to deliver closer tax and spending co-ordination and political links across the 17 countries in the euro.

But this reform, which could take place in 2014, would give the UK the opportunity to renegotiate its relationship with the EU.

The French president, Francois Hollande, is among the European politicians who are opposing Mr Cameron's demands to "repatriate" powers.

Andrew Duff, the Liberal Democrat MEP, who heads the group, told The Times that Britain should be offered "associate membership", which would be a kind of second class membership that does not currently exist.

"If David Cameron proposes a catalogue of opt-outs, derogations, red lines and rebates for Britain to pick and choose, then he will strengthen the argument for a formal association for the UK," Mr Duff said.

The Union of European Federalists is expected to publish its own draft new EU treaty within months, which will include "associate membership", Mr Duff said.

"The priority for the Continent is to create a federal system which works and Britain is seen at present as a continual impediment."

Mr Cameron has said he believes Britain should remain inside the EU but with a new relationship.

Boris Johnson, the London Mayor, has called for a "pared down" EU membership for Britain focusing on trade in the single market.

The plan emerged as business leaders warned against quitting the EU.

The CBI said Britain must remain in the centre of the European Union.

The group's director-general John Cridland said it was "essential that we stay at the table to bang the drum for businesses and defend our national interest".

In his new year's message he emphasised the importance of the EU to trade, arguing that "we pack a bigger punch in securing trade deals inside the EU than outside".

That sounds good to me.....an Associate Member , go for it Cameron.!

**Panda** Mon 31 Dec - 11:17

New Year's Quiz: 40 trick questions about Europe

31 December 2012Frankfurter Allgemeine Sonntagszeitung Frankfurt

Ticking the right box: Chancellor Angela Merkel at the Bundestag in December 2012.

AFP

Three years of the euro crisis, 2013 is around the corner, and you still have some questions? So does essayist Hans Magnus Enzensberger. The outspoken critics of the Brussels bureaucracy has been inspired to draw up a quiz – with, of course, entirely objective questions. Have fun!

Hans Magnus Enzensberger

What’s it all about when an intelligent woman occupying a high position claims: “If the euro fails, Europe fails”?

1. A threat? Yes ☐ No ☐

2. A defensive statement? Yes ☐ No ☐

3. Or just a piece of stupidity? Yes ☐ No ☐

4. Do you feel that our continent still exists much as it always has, despite the reality that over the last two thousand years, the talent, the denarius, the guilder, the lira, the lepton and the Reichsmark have all perished? Yes ☐ No ☐

5. Do you know who invented the abbreviation “euro”, which before the end of the twentieth century no one had ever had to mouth? Yes ☐ No ☐

6. Are you capable of deciphering acronyms such as ECB, EFSF, ESM, EBA and IMF? Yes ☐ No ☐

7. Do you suspect that most European countries for quite some time have no longer been governed by democratically elected bodies, but are ruled by these acronyms? Yes ☐ No ☐

8. Have you voted for these ‘facilities’? Yes ☐ No ☐

9. Are they mentioned in the Constitution or in any other European constitution? Yes ☐ No ☐

10. Have you been notified in the past few years that there is “no alternative” to the decisions of these institutions? Yes ☐ No ☐

11. Are homeless persons, drug abusers, wage earners or retirees not entitled to “sign up for” their financial fix, but members of the euro group and bank executives are? Yes ☐ No ☐

12. Is this demand met on a regular basis? Yes ☐ No ☐

13. Have you recently come up against the technical term “financial repression”? Yes ☐ No ☐

If so, does it mean:

14. Pension cuts? Yes ☐ No ☐

15. Tax hikes? Yes ☐ No ☐

16. Debt write-offs? Yes ☐ No ☐

17. Compulsory levies? Yes☐ No ☐

18. Inflation? Yes ☐ No ☐

19. Currency reforms? Yes ☐ No ☐

20. Do you know the name and exact address of the “markets” that tell the euro rescuers what they have to do? Yes ☐ No ☐

21. Must the Coast Guard continue to screen whether passengers in distress are “system-relevant” before they can be saved? Yes ☐ No ☐

Do you agree with the following views?

22. “Power is the privilege of not having to learn.” (Karl German, 1912-1993.) Yes ☐ No ☐

23. “Life without a Constitutional Court is possible, but pointless.” (Loriot Mops) Yes ☐ No ☐

24. “We decide on something, put it on the table and wait a while to see what happens. If there is no hue and cry and no uprisings, because most people have no idea about what has been decided, then we carry on – step by step, until there is no turning back.” (Jean-Claude Juncker, chairman of the Euro Group, 1999.) Yes ☐ No ☐

25. “Politicians are like bad horsemen who are so busy keeping themselves in the saddle that they can no longer worry about the direction they are riding in.” (Joseph A. Schumpeter, 1944.) Yes ☐ No ☐

26. Did the European Commission know what was meant by the word “subsidiarity”? If so, has it forgotten it? Yes ☐ No ☐

What does the term “quantitative easing” mean?

27. A yoga exercise? Yes ☐ No ☐

28. The acceleration of the printing press? Yes ☐ No ☐

29. Is the constitutional judge Gusy from Bielefeld right to say: “Where there is a trough, pigs will gather”? Yes ☐ No ☐

30. Does the blossoming metaphorical speechifying of the saviours of the euro make you feel all cosy and warm inside, or does it come across to you as somewhat menacing, confusing or just plain ridiculous? Are you in a position to distinguish precisely between ‘umbrellas’, ‘levers’, ‘bazookas’, ‘Big Berthas’, ‘firewalls’ and ‘aid packages’? Yes ☐ No ☐

31. Do you feel coddled in the confidence that Karl Valentin summed up in the words: “I hope it is not as bad as it already is”? Yes ☐ No ☐

32. If it turns out that introducing a new paper currency has led not to the integration of Europe but to its sundering, and led not to understanding but to hatred and mutual resentment, would it appear advisable to abandon this position, or invoke the motto “close your eyes and carry on down the same road”? Yes ☐ No ☐

33. Or is that impossible because it would mean that a [narcissistic disorder afflicts the responsible politicians] (883411)? Yes ☐ No ☐

34. Is there a Europe this side of the EU institutions and their 40,000 officials, or are they the sole representatives of our continent, the only ones whose voices matter? Yes ☐ No ☐

35. Are these the people who have the right to decide who is to be considered “anti-European”? Yes ☐ No ☐

36. Do you grasp why the European politicians handle the Treaty of Rome and the Maastricht Treaty as if they had never actually signed them? Yes ☐ No ☐

37. Do you believe that referenda and elections annoy them because any expression by the population could disrupt their efforts to reassure the “markets”? Yes ☐ No ☐

38. Is democracy really such a bad idea that it can be dispensed with when necessary? Yes ☐ No ☐

39. Does the example of China not show that without democracy, in the age of globalisation, one can still become a successful world power? Yes ☐ No ☐

40. Accordingly, is the political disenfranchisement of citizens inevitable, and is their economic dispossession the necessary consequence of that? Yes ☐ No ☐

HM Enzensberger’s Euro Quiz will be published in February 2013 as a preface to a new book by economist Joachim Starbatty Tatort Europe (Crime scene Europe).

**malena stool** Mon 31 Dec - 11:45

Ah, I see Angela has shaved of her moustache for the New Year opening of her 1000 year Reich..

**Panda** Mon 31 Dec - 12:08

malena stool wrote:Ah, I see Angela has shaved of her moustache for the New Year opening of her 1000 year Reich..

malena, Merkel is calling for patience from Germans because the crisis is not over, and if the U.S. do not draw back from the fiscal cliff, the rest of the world will be affected.

**malena stool** Mon 31 Dec - 12:57

The crisis will never be over while the Euro is the common coinage of Europe... There was an economist who stated on tv that the Euro was valued differently in different countries within the EU. How can any country within the EU run its affairs profitably when the Germans or the French offer higher returns for the investment of the same Euro?

**Panda** Mon 31 Dec - 13:26

malena stool wrote:The crisis will never be over while the Euro is the common coinage of Europe... There was an economist who stated on tv that the Euro was valued differently in different countries within the EU. How can any country within the EU run its affairs profitably when the Germans or the French offer higher returns for the investment of the same Euro?

malena , the Euro cannot survive in it's current state and I think part of this is not just the fact that at least 6 Countries have had bail-outs which increases their indebtedness but they cannot adjust the currency llike we can. Also, there is the question of different cultures, different languages, different work ethics etc. I wouldn't be surprised if there is a breakaway group Germany, Finland, Sweden , Norway, Holland for example.Cyprus, which has seen a big influx of Russian Oligarks , both North and South thought Russia would help with a bail out , but the Russians have said Niet.

I think we are looking at a World recession, too much indebtedness and unemployment when there is so little export.

Off topic "Yes Minister "is going to be on Gold on 15th January. New edition, I saw a preview , don't think it will match the two main characters...I can see them clearly but can't remember their names. New EC Thread - Page 26 294124

**malena stool** Mon 31 Dec - 19:15

Hi Panda, I do not think there is any real or easy answer to the inequality of the value of the Euro in different countries other than to disband it and return to each nations own currency, because neither the Germans nor the French will lower their standards to assimilate those of the poorer countries within the Euro zone. The Germans have already readjusted themselves when reuniting with eastern Germany back in the 1990's and aren't likely to put themselves through that again.

Yes Minister and the follow up, Yes Prime Minister were brilliantly funny and well worth the reruns we get from time to time. I would imagine they typify what really happens in Westminster...

Rt Hon Jim Hacker MP, was played by Paul Eddington. (RIP).
Sir Humphrey Appleby, was played by Nigel Hawthorne.
Private Secretary Bernard Woolley, was played by Derek Fowlds.

**Panda** Mon 31 Dec - 19:28

malena stool wrote:Hi Panda, I do not think there is any real or easy answer to the inequality of the value of the Euro in different countries other than to disband it and return to each nations own currency, because neither the Germans nor the French will lower their standards to assimilate those of the poorer countries within the Euro zone. The Germans have already readjusted themselves when reuniting with eastern Germany back in the 1990's and aren't likely to put themselves through that again.

Yes Minister and the follow up, Yes Prime Minister were brilliantly funny and well worth the reruns we get from time to time. I would imagine they typify what really happens in Westminster...

Rt Hon Jim Hacker MP, was played by Paul Eddington. (RIP).
Sir Humphrey Appleby, was played by Nigel Hawthorne.
Private Secretary Bernard Woolley, was played by Derek Fowlds.

Thanks malena, I remember now....a snippet of the new version of Yes Minister shows the Minister and Civil Servant, the Minister you will know , can't remember his name, but the civil servant I didn't recognise. I don't think anyone will beat the original cast though Nigel Hawthorne was excellent. New EC Thread - Page 26 25346

As for what will happen in Europe, it,s anyone's guess. How much more austerity can these 6 vulnerable Countries take.?? Also, the ECB is doing like Bernard King was fond of doing , quantitive easing by printing more euros to lend to these Countries, thereby increasing the debt , it's a vicious circle.

**Panda** Tue 1 Jan - 13:35

Stocks to soar as world money catches fire, Calvinst Europe left behind

Bears beware. A monetary revolution is underway.

New EC Thread - Page 26 Eurozone_2255355b

New EC Thread - Page 26 Eurozone_2255355b

"This is the year when it will become clear to many that Europe is in far deeper trouble than supposed; that it is resorting to ever more coercive measures and autocratic methods; and all to save a currency that is the elemental cause of the disaster in the first place, and should morally be broken into its democratically-controlled parts." Photo: Reuters

By Ambrose Evans-Pritchard

9:43AM GMT 01 Jan 2013

163 Comments

The US, Japan, Britain, as well as the Swiss, Scandies, and a string of states around the world, are actively driving down their currencies or imposing caps.

They are tearing up the script, embracing the new creed of nominal GDP targeting (NGDP), a licence for yet more radical action.

The side-effects of this currency warfare -- or "beggar-thy-neighbour’ policy as it was known in the 1930s -- is an escalating leakage of monetary stimulus into the global system.

So don’t fight the Fed, and never fight the world’s central banks on multiple fronts.

Stock markets have already sensed this, up to a point, lifting Tokyo’s Nikkei by 23pc and Wall Street by 10pc since June.

The New Year ritual of predictions is a time for bravado, so let me hazzard that the S&P 500 index of stocks will break through its all time high of 1565 in early 2013 -- mindful though I am of flagging volume and a wicked 12-year triple top.

The Shanghai Composite will continue its explosive rally as China loosens the spigot again. The Politburo is reverting to its bad old ways of easy credit for state behemoths, and an infrastructure blitz, with $60bn of fiscal stimulus as well for good measure. Reform can wait.

Yes, we all know that China has added $14 trillion in extra credit since 2009, equal to the entire US banking system. It is trouble waiting to happen. But trouble can be deferred.

The more that investors come to think another cycle of global growth is safely under way, the riskier it will be to hold corporate bonds, $8 trillion in the US alone. With yields priced for deflation, that bubble is dangerous to own on 10-year maturities. The money will rotate into equities and bullion, with China’s central bank driving gold through $2,000 at last.

As a polar bear, I doubt that such a happy cycle is upon us. We merely have a rally within a structural trade depression.

The headwinds of deleveraging will return with gale force. The glut of excess global savings that lay behind the great crisis of 2008-2009 -- and that has kept us stuck in the Long Slump ever since -- is still getting worse. The international trading system remains badly out of kilter.

There is chronic overcapacity across global industry and not enough demand to carry a full cycle of economic expansion, or to reach "escape velocity" as they say these days.

Until that changes, every global rebound is doomed to disappoint within a few quarters, and that includes the cyclical upswing of 2013.

The world savings rate averaged 21.7pc in the early Noughties (IMF data). It was 23.1pc in 2010, 23.9pc in 2011, 24pc on 2012, and is expected to rise to an all-time high of 24.6pc in 2013, and then to a fresh peak of 25.5pc by 2015.

The old culprit is the East. The new culprit is the West. A string of states are tightening ferociously in concert, disregarding the feedback effects on each other. Britain has a fat primary deficit and needs to so. Euroland less. It is slashing for doctrinal reasons, in thrall to Calvinism.

Even so, there is enough monetary fuel in the global economy to pack a punch into 2013. A good gauge -- six-month real M1 -- has recovered briskly from the mid-2012 contraction in Brazil, China, India, Britain, and the EMU-core.

Japan’s new premier Shenzo Abe is sweeping into office like Roosevelt in 1933, commanding the central bank to do whatever it takes to defeat deflation, deliver 3pc NGDP growth, and drive the dollar-yen rate to 90.

The Bank of Japan is already boosting its assets by 7.5pc of GDP this year. It will have to do yet more to satisfy Mr Abe. If he means it, Japan is about to give us all a nuclear monetary shock.

The Fed is no slouch either. It is printing $1 trillion in 2013, even though the money supply is already catching fire. It is has cooked up a jobless target of 6.5pc, meaning anything it wants. If this caps the dollar in the process -- and safeguards America’s shale-driven manufacturing revival -- Ben Bernanke might allow himself a wry smile.

Modern currency wars are a form of `pass the parcel’. They increase global stimulus in aggregate -- Nouriel Roubini is wrong to call it a "zero sum game" -- but those left holding the package come off worst. Or as the IMF puts it delicately, global imbalances "rearrange themselves into a different geographical constellation."

=======================================

Europe chooses not to play because Germany controls the machinery, and Germany does not yet need help. So Europe will take it on the chin, and the Latin bloc will endure another year of slow asphyxiation.

The EMU story of 2012 was whether the Nordics would expel Greece to set a salutary example. The larger story of 2013 is whether the victim nations will start to question why subbordination in a D-Mark export sphere is in their interest.

The bond yields that once led headlines no longer matter now that Germany has agreed to let the ECB act as a lender-of-last-resort for Spain and Italy -- on tough terms, of course.

The focus is shifting from financial froth to the political economy. Debt auctions are passé. We all watch the jobles rate and opinion polls these days. And the poll that matters most is the rising support for the Front National’s Marine Le Pen, champion of the French franc, already pulling even with Gaulliste rivals.

The euro will reach $1.44, just as austerity bites in earnest, a ruinous mix. As France loses 50,000 jobs a month --and its car industry -- François Hollande will agitate for use of Article 219 (2) of the Lisbon Treaty, exhorting the ECB force down the exchange rate. By then it will be too late. Scorched-earth policies will have destroyed is quinquennat.

Italy’s lira parties will not win the February elections. But a scotched Silvio Berlusconi will be more dangerous to the 2nd Monti commissariat on the outside, with his sharp media teeth. Italy will be ungovernable. But there will be no `Badoglio’ moment, no walking out, this year.

Spain’s jobless rate will ratchet up from 26pc to 30pc as Mariano Rajoy does what he is told, slashing and burning, in the midst of an accelerating housing crash. The anomaly is why the Left -- in Spain, and across Europe -- continues to back a reactionary EMU agenda that sets policy in the interest of creditors and drives youth unemployment rise to 55pc. La trahison des clercs.

It is always hard in socio-politics to foretell a snapping point. It can come suddenly, by a chance event, like Britain’s Invergordon 'mutiny’ in 1931, or the shooting of French dockers in 1935.

Yet I see little to disturb Europe’s grim status quo this year. The riots of 2013 will be just as ineffectual as the riots of 2012. Contraction will grind on. Germany's Wolfgang Schäuble will have his way.

Yet it will be a Pyrrhic victory. Euroland will be left behind as the rest of the world moves on, lagging US growth by almost 3pc of GDP for a second year, and certain to lag again in 2014, the "new normal".

This is the year when it will become clear to many that Europe is in far deeper trouble than supposed; that it risks tipping into irretrievable decline; that it is wasting its precious youth at the worst moment, as the aging crunch nears, when it should have none to spare; that it is resorting to ever more coercive measures and autocratic methods; and all to save a currency that is the elemental cause of the disaster in the first place, and should morally be broken into its democratically-controlled parts.

There is no place for a monetary dictatorship in 21st Century Europe.

Clarity is a good start.

**Panda** Tue 1 Jan - 14:13

Austerity has made Europe worse, says Cyprus President Demetris Christofias

Cyprus President Demetris Christofias has hit out against the harsh austerity measures being meted out to struggling eurozone members as the Mediterranean island faces a bleak new year.

7:18PM GMT 31 Dec 2012

155 Comments

The communist head of state, who tried repeatedly to avoid the inevitable punishing terms of an EU bailout by seeking credit from Russia, said that the policies imposed by the bloc's richer members had been counter-productive, AFP reported.

"It must be admitted that policies implemented on a pan-European level have not succeeded in providing a solution to the economic problems created by the crisis," Christofias said in a televised new year's message.

"On the contrary, they have recycled and worsened economic and social injustice," he added.

Resort island Cyprus has already pushed through tough austerity measures to meet the demands of eurozone creditors for more than €1bn in cuts and savings. The four-year adjustment programme represents 7.25pc of gross domestic product.

Parliament has approved public sector salary cuts, a freeze on index-linked wages until 2016, extended emergency salary contributions in the public and private sectors, and increases in duty on cigarettes, alcohol and petrol.

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But eurogroup finance ministers are not expected to take a final decision until January 21 on a draft agreement with international lenders for a bailout reportedly totalling €17.5bn euros.

Christofias said the picture painted by many European countries in trouble does "not honour" the European Union.

"The future of a United Europe cannot be poverty, deprivation, unemployment and homelessness."

Christofias said the EU's "one-sided" approach has failed to achieve growth in those recession-hit countries it has tried to help.

"A different approach is needed which will emphasise development, social cohesion and true solidarity within the Union. It is with sadness that we observe the absence of such policies."

Nicosia requested a bailout in June when its two largest Greek-exposed banks asked for assistance after failing to meet EU capital buffer criteria.

It has been negotiating the terms with the so-called troika of the European Central Bank, the European Union and the International Monetary Fund.

The money needed by Cyprus has been widely reported to total €17.5bn - €10bn for the banks, €6bn for maturing state debt and €1.5bn for public finances.

The country's entire GDP in 2011 was €17.97bn and, according to 2013 budget projections, it is expected to shrink 2.4pc this year.

Christofias conceded he had hoped to secure a loan from elsewhere rather than enter the EU's support mechanism because it would involve "painful sacrifice".

"Even before the initial agreement with the troika, we made great efforts to find funding from other sources, precisely because we at least, were under no illusion about the problems we were going to face."

Cyprus had hoped to secure a €5bn loan from Russia, on top of €2.5bn it already borrowed last year, but agreement never came.

Christofias was making his last address to the nation as he will not be standing for re-election in February, becoming the first Cyprus president not to do so.

He always said he would step down if he failed to make progress towards ending the island's nearly four-decade division.

In his speech, he charged that stalemated UN-backed reunification talks had been undermined by Turkey, which occupied the island's northern third in 1974 following a Greek Cypriot coup seeking union with Greece.

Christofias said launching the search for offshore oil and gas - over the protests of Turkey - had been his biggest achievement in office.

"Finding natural gas is the most important economic, political and social event since Cyprus independence [in 1960]," he said.

"I have no doubt that this five-year period will remain in history as the period when the prospect of natural gas materialised and created hope for us, our children and grandchildren."

**Panda** Wed 2 Jan - 18:08

Ireland: What is the point of the EU presidency?

2 January 2013La Tribune Paris

The EU flag is hoisted above Dublin Castle on December 31, 2012

AFP

On January 1, the Dublin government took over the rotating presidency of the European Union. However, French daily La Tribune argues that economic crisis and a shift in the balance of power in the EU have turned this institution into an empty shell.

Romaric Godin

Every six months, it is time for another round of musical chairs. One member state gives up the Presidency of the European Council, while another takes over. The outgoing country announces that it is pleased with its excellent work as “president” while the new incumbent pledges that it will break new ground in the drive for European integration. The handover that occurred at the end of 2012 and the beginning of 2013 was no exception.

At a press conference to present a synopsis of the main results of the six-month Cypriot presidency, the country’s Deputy Minister for European Affairs, Andreas Mavroyannis, remarked that "our aspiration was to move even a small step further towards European integration. And, I think that the important results of our Presidency reflect that we succeeded in this.” For its part, the Irish government declared that its term at the helm of the EU, which began on January 1, would be devoted to "the promotion of growth and jobs”.

Once again Europe has demonstrated its mastery of well-worn propaganda and waffle. However, the reality of its current situation is a far cry from such cosy sentiments. First and foremost, the “important results” achieved by the Cypriot presidency should be viewed in the context of the major rift between member states which emerged in the course of talks on the European budget, the United Kingdom’s threat that it would leave the Union, the latest quick-fix solution that will do nothing to resolve the eurozone crisis, and a banking union that remains in limbo. And even then, with regard to the EU presidency, all of this amounts to little more than a side issue. The real problem is that the Cypriot presidency cannot be held responsible for the above summary of “results”.

Limited presidential powers

Nicosia is no more to blame than Copenhagen or Warsaw, the two previous incumbents of the EU presidency. How could Cyprus, a small country of 800,000 people which took over the EU presidency at a time when it was negotiating the conditions of its own bailout, be expected to take the initiative? By the same token, how could we expect Poland or Denmark, two countries that are not in the euro, to "provide the impetus” to cure the EU’s eurozone malaise? And how can Ireland, which is currently negotiating a €60bn reduction to the debt owing to the EU and the ECB in the wake of its banking meltdown, be expected to impose its views on the other 26 EU member states?

There is no end to such questions in an EU caught in a eurozone crisis, which has dealt all of the trump cards to the country that is its main payer, that is to say Germany. Much of European policy is now being decided in Berlin, quite simply because nothing can be accomplished without the agreement of the federal republic. Only major countries and institutions like the Commission or the ECB can still expect — and even then, only under certain conditions — to act as a counterweight.

France and Spain succeeded in forcing Berlin to accept a banking union, but only when they acquiesced to German conditions on its implementation and the size of the banks concerned. Notwithstanding its attempt to coerce Berlin by threatening to leave the EU, the United Kingdom’s ability to oppose German hegemony remains very limited. At the same time, the Commission’s plan for a reinforcement of its budget to combat the crisis as well as French efforts to impose "an agenda for growth” have both been abandoned following objections from Germany.

Given this state of affairs, it is clear that neither Nicosia or Dublin can be expected to impose a vision for Europe on the German taxpayer, or even to obtain concessions from the the German government. European policy is now decided by Berlin and Brussels. Of course, you may say that the rotating presidency was never designed to actually run the union but rather to generate momentum, prepare initiatives, and promote compromise. But even viewed in these terms, the rotating presidency is increasingly a formality.

VIP spectators

The 2009 coming into force of the Lisbon Treaty led to the inauguration of a European Council President — a post currently occupied by Belgium’s haiku-writing Herman van Rompuy — with a brief that is very similar to the one granted to the rotating presidency. The main difference is that the permanent Council President is better placed to ensure continuity and coherence in the preparation of European initiatives. At the same time, he is also the one who rules over the secretariat tasked with the organisation of European summits.

It follows that the action of the European Council is largely determined in Brussels, and only on rare occasions by the country charged with the rotating presidency. With this in mind, it is significant that since 2004, European summits have taken place in Brussels rather than, as they did in the past, in the member state charged with the European presidency.

The representatives of the rotating presidency have thus assumed the role of VIP spectators. They bear the privilege of a presidential label, but, like certain dignitaries at the Byzantine court, they are guaranteed respect even though they do not wield any real power. Council press releases that continue to wax lyrical about the efforts and achievements of the countries presiding the EU are merely an exercise in form and devoid of any real substance.

As it stands, the rotating presidency has become a showcase that enables countries to become better known — an opportunity to present well-designed Internet sites vaunting the merits of the nation (the Irish Presidency website even offers a comprehensive selection of recipes for national dishes) or a country’s tourist attractions (as did the Cyprus website). Of course, there is nothing wrong with these efforts to draw in tourists.

However, there are other schemes, like the "European Capital of Culture” programme, that are designed to fulfill this role. With this in mind, and in view of the current austerity, should we not consider doing away with this superfluous institution

**Panda** Thu 3 Jan - 13:18

Ireland: Black gold fever spreading in Cork

2 January 2013
PresseuropLa Vanguardia

Ireland, which took over the six-month rotating presidency of the European Union on January 1, may have found a way out of the crisis thanks to off-shore petrol. The idea has taken hold in Dublin since a bout of "black gold fever in Cork" notes Spanish daily La Vanguardia caused by the discovery of oil deposits in the Irish Sea. Ireland's second largest city is now "awaiting an economic boom" with the idea "fostering dreams" in a country deeply hit by the crisis, the paper says, adding –

Representatives from ExxonMobil, Texaco and other major oil companies lunch in the city's pubs and restaurants on the banks of the River Lee, just like, in Dublin, where the members of The Troika [Ireland's creditors, the International Monetary Fund, the European Commission and the European Central Bank]. But in this case, the intention is to invest and not to dictate their lending conditions.

The deposit, called the Barryfoe Field, is estimated at 280 million barrels worth €30 billion. There is only one detail yet to be resolved – where to find the €1.5 billion needed to exploit the deposit. Gathering these funds is the goal of a company called Providence, created by the local tycoon and former rugby player Tony O'Reilly. He says he wants to make Cork "one of the most prosperous cities in Europe". La Vanguardia says –

In the past, oil deposits were found in the Irish Sea, but their high exploitation costs made them unprofitable. The situation today is much more favourable because of the development of cheaper extraction techniques, the rise in the price of petrol and the low taxes on foreign firms investing in Ireland (the country has the lowest corporate tax rate in Europe, a constant source of friction with Brussels). Cork, the European headquarters for Apple and the site of US pharmaceuticals giant Pfizer's Viagra factory hopes to move to the next level and join the major league economic and financial big hitters. It hopes to become to Ireland what Aberdeen has become to Scotland and that the petrol from the Irish Sea will provide the same benefits as that provided by the North Sea. With [global] oil use reaching 88 million barrels per day and with a thirst for it so insatiable that environmental considerations are unable to quench it, this is not just wishful thinking.

**Panda** Fri 4 Jan - 17:10

Merkel shepherds us away from the fiscal cliff

3 January 2013NRC Handelsblad Amsterdam

Horsch

The last minute negotiations in Washington to avoid a budget shortfall show that short-termism is well grounded in US politics. And by contrast, it shows that despite her controversial handling of the euro crisis, the German chancellor is wise enough to instead push for long-term solutions.

Melvyn Krauss

To hijack a phrase made famous by the US historian Robert Kagan, “Americans are from Mars and Europeans from Venus” when it comes to dealing with questions of long-term fiscal health.

The fact that the best Washington politicians could come up with in the face of the so-called “fiscal cliff” is a stripped-down, minimalist agreement belies a genuine US interest in solving its long-term budget deficit problem.

This is not mainly because of US partisan differences (though it often is portrayed as such). Americans of whatever political stripe simply are not serious about the nation’s long-term fiscal health.

How else could you interpret the fact that the only way Washington politicians could be coaxed into accepting an even modest amount of fiscal austerity in pursuit of long-term fiscal health was to convince them – with gimmicks like the “fiscal cliff” – that greater amounts of austerity awaited had they failed to take at least a minimal dose of fiscal medicine now?

Jumping off the fiscal cliff

If US President Barack Obama and Congress really cared about fixing the country’s budget deficit problem, they would have enthusiastically jumped off the “fiscal cliff” with its mandated spending cuts and tax increases, not endlessly haggled to circumvent it.

This is just the opposite of what is happening in Europe where German Chancellor Angela Merkel is leading the charge for short-term fiscal pain in pursuit of long-term fiscal gain. Keynesians and supply-siders both disagree but Mrs Merkel is sticking to her guns that Europe can not return to sustainable growth and prosperity without first putting its fiscal house in order – and she is creatively using German money to get the German rules she wants for Europe.

This – plus the fact that she has been both wise and courageous enough to embrace Mario Draghi’s market-stabilising bond-buying program in the face of determined Bundesbank opposition – is the reason I believe she deserves to be Europe’s person of the year.

Investors note: 2013 looks like the year markets start to realise it’s the “people from Venus” who are on the right track and the “Martians” who are on the wrong one. It’s the Americans who are kicking the fiscal reform can down the road, not the Europeans.

‘Tidal wave of turmoil’

This is putting Europe in danger as well as America. Washington’s failure to address US long-term fiscal health can spark a virtual tidal wave of turmoil throughout the entire global economy. We live in the kind of inter-connected world where the “people from Venus” can suffer grave consequences if the “people from Mars” are not tending to business.

A blow up of the US bond market would do serious damage to Europeans and Americans alike (not to mention the Asians).

Part of the blame for US fiscal health problems rests squarely on the shoulders of the US Federal Reserve, whose quantitative easing policies – whether intentionally or not – have made it easier for US politicians to put the nation’s long-term fiscal health on the back burner.

Why make painful fiscal reforms to protect your sovereign debt when the central bank’s unconditional buying of US bonds does the job for you? (The ECB is demanding reforms before it spends a euro on bond buying).

Fed chairman Ben Bernanke undoubtedly would be loath to admit it but quantitative easing, Federal Reserve style has helped take the air out of the US fiscal reform balloon.

**Panda** Sat 5 Jan - 18:10

Denmark: Let’s truly commit to Europe

4 January 2013Berlingske Tidende Copenhagen

Comment30

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Bojesen

As they celebrate the 40th anniversary of entry into the European Union, Danes are weighing up the pros and cons. To persuade fellow Danes that the Union can still benefit Denmark, all the country's political forces should come together and propose daring new ideas, writes Berlingske.

Berlingske Tidende

Measured on any political or economic scale, Denmark has done well out of its membership in the EU. There are many examples: the freedom of movement of labour, goods and capital, the internal market, the common environmental policy, cooperation on research and innovation, and the fight against terrorism and cross-border crime, to mention only a few.

However, with Europe gripped by crisis for some years now, scepticism towards the EU is growing. Some cautious observers, in Denmark and in other European countries, are worried that the project may not be as wise as was once thought.

It's not the EU, though, that has caused the economic problems. The crisis has been so protracted mainly because some European countries have welfare structures that are too big, too expensive and too inefficient, and that have failed to keep up with the times. Several countries have already made reforms, but the changes have usually been too few and too minor. To overcome the crisis, Denmark and other European countries must prepare themselves for what comes after the crisis. The more reforms to the rigid European welfare states, the better.

Rich paying the most

In these years of crisis, it is the rich countries of the EU who are paying the most for the negligence of the others. That is what has stirred up dissatisfaction among a group of reforming countries, including Denmark, which have made an effort to reduce their budgets and push through reforms to emerge from their own difficulties – and now have to pay to clean up the messes the others have created. The alternative to reforms is to end up in a condition like Greece, and that will be the end of Europe's hopes of becoming a power like the United States or China.

As Danish Minister for European Affairs Nicolai Wammen notes, there are strong reasons to reflect deeply on how Denmark can get the most out of cooperating with the rest of Europe. This is why an agreement on European policy has to be hammered out between the parties. It's an accurate judgment, and any such agreement must contain a clear strategy on how to make the EU more relevant to Denmark.

Need for a new plan

The need for action is urgent, especially as the prime minister [Helle Thorning-Schmidt] has stepped onto the stage with a bold initiative. The great Danish conservative-liberal party, Venstre, though, must also try to come up with some ideas, while recognising that it is the two major parties, the Social Democrats and the Liberals, who will carry the burden.

That is why the Social Democrat prime minister and her challenger, former prime minister and Lars Løkke Rasmussen (Liberal), should quickly reach a political agreement on long-term European policy in Denmark for the years ahead. Then they can bring in the other pro-European parties.

2013 will be a decisive year for the European Union. We just have to be ready with a plan that considers both how to ensure popular support for the EU, and how we can place ourselves at the heart of Europe.

**fuzeta** Wed 9 Jan - 22:21

The Americans interfering and giving their opinion on what we should do a about the EU is making me fume New EC Thread - Page 26 816281

How dare they? They are in a complete mess and want to give us advise! All because it is in their best interest. Well the last time we got involved taking their advice has cost untold lives and continues to do so.

Then their is that Rumpey, so called president telling us we can't pick and choose what we want from Europe and what we don't want. Well everyone else does!!! He is backed by the Irish Prime Minister, well we only have to look at what has happened to Ireland to come to take him with a pinch of salt.

Why is it that they are all telling us we are facing isolation with dire consequences i wonder? They want to rule us and do not want us to escape, they want our money plus complete control and they know that if we leave others will follow.

Well listening to the whole lot of them makes me want to leave more and more and I already desperately want us leave.
It rings further warning bells to me that they are terrified of what we may do because of their own interests. They are trying to make it look as though we are mad to leave this ridiculous self serving organisation. Bring on that referendum soon as you like. It would be the best thing we ever did to get out. imo

**Badboy** Thu 17 Jan - 0:13

SOMEONE WAS SAYING EU AND GREECE WILL HAVE SOME ECONOMIC GROWTH THIS YEAR.

**fuzeta** Thu 17 Jan - 10:26

Hello Badboy I will believe it when I see it. How about you?

**Badboy** Thu 17 Jan - 21:53

fuzeta wrote:Hello Badboy I will believe it when I see it. How about you?

PROBABLY HAVE TO WAIT AND SEE

**Badboy** Sat 19 Jan - 17:15

CORFU IN GREECE IS SAID TO HAVE ONE OF CHEAPEST BASKETS OF GOODS TOURISTWISE

**Panda** Mon 21 Jan - 13:19

Euro Ministers Set to Clash Over Terms of Channeling Aid
Q

European finance ministers gathering for the first time this year begin the long march to enacting policies they promised to subdue the debt crisis, beginning with how to channel firewall funds directly to banks.

European Stocks Are Little Changed as Ministers Meet
Q

European stocks were little changed as euro-area finance ministers prepared to meet for the first time this year. Asian shares fell while U.S. index futures fluctuated between gains and losses.

Spain Recession Scars Exposed as Jobless Seen at 6 Mln
Q

Spain’s scars from the slump that overshadowed Prime Minister Mariano Rajoy’s first year in office will emerge this week as data show the toll on economic output that may have kept as many as 6 million people out of work.

**Panda** Mon 21 Jan - 19:40

Employment: The ‘lost generation’ that never was

21 January 2013Dziennik Gazeta Prawna Warsaw

Comment6

New EC Thread - Page 26 Europe-lost-generation_0

Job advertisements at the Job and Career Market in Hannover (Germany), April 2012
AFP

With every serious crisis we feel sorry for young people who cannot find work, calling them a “lost generation”. Well, there have been many such generations in history and they always succeeded in the end, writes DGP.

Jędrzej Bielecki
They were supposed to be our hope and instead have become a burden. More than 400,000 young Poles are unemployed and few call them anything other than a “lost generation” In fact, the disease is all over the continent; elsewhere in Europe, especially in the south, things are even worse. Eurostat reported in October that the unemployment rate among under-25-year-olds in Poland was at 27.8 per cent, compared with 55.9 per cent in Spain, 57 per cent in Greece or 36.5 per cent in Italy. Even in a country as wealthy as France one in four young people are jobless.

Misleading statistics

Such statistics are impressive but they are also misleading. This is because they only include those who either are employed or not, failing to take into account all those who study, undergo vocational training, travel or do nothing by choice. That is why it is more appropriate to speak of NEETs (“not in education, employment, or training"), an acronym coined by the International Labour Organisation.

When we apply this category, it turns out that the percentage of Poles aged 15-29 who neither work not study stands at 15.5 per cent. This is a lot –a rise of 22 per cent since the crisis began –but it means that only one in six young Poles face gloomy prospects rather than one in two. One can hardly speak of a “lost generation” when five-sixths of it are doing something sensible. It is the same case elsewhere in Europe; the NEET ratio for Greece is just 23 per cent, while in Spain it is at 21 per cent. In countries such as Netherlands or Austria it is as low as 5-8 per cent.

Young, unemployed and with prospects

Paradoxically, as especially the Spanish example demonstrates, the high proportion of young unemployed people can actually be a source of hope. The sharp rise in joblessness levels in Spain in recent years has been caused less by the recession and far more by the labour-market reforms launched by Prime Minister Mariano Rajoy. ‘Employers are now able to lay off redundant staff more easily, but when market conditions improve, they won’t be afraid to start hiring again’,said Jorge Nunez, expert at the CEPS think-tank in Brussels.

Before Rajoy’s reforms, Spanish companies had to negotiate changes in employment terms with industry- rather than workplace-level union organisations and layoffs meant the necessity of pocketing out hefty severance pay as well as, often, of proving to the court that the personnel reduction had been necessitated by “objective”economic factors.

Despite such rigid regulations – a legacy of the Franco era –Spanish employers were not loathe to start hiring when the economy went on a fast-growth track. Following the country’s EU accession in 1986, unemployment among young people halved within three years to 18 per cent. Will the Spaniards get out of trouble as quickly this time?

Zsolt Darvas at the Bruegel Institute in Brussels said:

"This is the best-educated young generation in this country’s history. Thanks to Mr Rajoy’s reforms the Spanish economy’s competitiveness has improved quickly; the country had a trade deficit of 11 per cent of GDP only five years ago and today boasts a 2 per cent surplus".

Crisis restructuring

Poland represents a similar case. The country has already seen two “lost generations” in 1992/1993 and 2002/2003 and is now seeing its third. Even if we settle for the Central Statistical Office’s pessimistic data, the proportion of unemployed under-25-year-olds back in 1995 was twice as high as it is today. Education is another favourable factor, as the proportion of students has risen five-fold since 1990 and the percentage of diploma-holding workers is 2.5 times higher.

Crisis periods have always been a time of intense restructuring for the Polish economy. Labour productivity is 20 per cent higher today than back in 2008, which means that four people generate the same output that five were required for back then. Cutting-edge industries, such as advanced electronics, molecular research or high-class automotive components, have seen vigorous growth, causing more and more multinationals to shift their manufacturing operations from southern to eastern Europe, notably Poland.

One could say that the higher unemployment is a price Poland is paying for productivity gains that will give it many years’advantage over rivals. Eurostat figures show that Poland’s productivity rate was just 57 per cent of the EU average in 2012, compared with a figure twice as high in the neighbouring Germany.

The German example

Germany serves as an example of how effective labour-market reforms can be in improving prospects for young people. Unemployment is at its lowest today since unification, both among young people (12 per cent) and overall (5.4), and is gradually heading towards full employment. But a decade ago, before the reforms introduced by Chancellor Gerhard Schröder, Germany was the “sick man of Europe”in labour-market terms.

‘We should be copying their vocational training system. Young people’s employment prospects depend partly on themselves and on whether they are able to adapt their plans to market realities’, said Katinka Barysch at the Centre for European Reform in London.

There are many indications that the worst is already past for young people, both in Poland and Europe. Last year may have seen widespread economic stagnation, but the EU avoided the worst — a eurozone break-up and a resulting recession that it would be recovering from for decades, if it survived at all, that is.

While this may be hard to believe today, only two or three years from now, rather than accepting whatever job is offered to them, young people with the right qualifications may actually be dictating terms to employers.

Translated from the Polish by Marcin Wawrzyńczak

**Panda** Mon 21 Jan - 23:28

France-Germany: Love burns bright with 50 birthday candles

21 January 2013Le Monde Paris

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Dieter Hanitzsch

Paris and Berlin may be celebrating the anniversary of the Elysée Treaty, which founded their reconciliation, but their marriage has hit the rocks. The French are making faces at the economic success of the Germans, who aren’t holding back when it comes to pointing out the weaknesses of their neighbours. But we have to keep the love alive.

Arnaud Leparmentier
The New Year’s Eve addresses reached us a little late. Not President Hollande’s , but Angela Merkel’s. It was an almost ghostly apparition. The Chancellor had a touch of the imperial about her. For Angela Merkel, her speech was a walk in the park. The address, though, did deliver some of the Chancellor’s gloomy projections for the year ahead: “The crisis is far from over.”

This is not what we have seen during the past year. We have seen a German Chancellor ruling over a pacified Germany, nine months away from a general election. Merkel was radiant on the television screen, dressed in grey satin, rising up from her perch in the Chancellery, the Reichstag building hovering in the background – the incarnation of German parliamentary democracy.

Her tone was calm, with a slight smile. Some people are criticising this physicist, daughter of a comfortable Lutheran pastor in East Germany, of preferring the hard sciences to the humanities, of lacking a historical consciousness at a time when the question of Europe hangs heavy in the air.

Delving into the past

Angela Merkel is working hard to follow the fathers of the Federal Republic into the history books. In her New Year’s address she delved back 50 years: she referred to Walter Bruch, German inventor of the PAL colour television system, which finished off our national Secam system. She recalled Kennedy proclaiming “Ich bin ein Berliner” in front of the Berlin Wall, and she paid tribute to Charles de Gaulle and Konrad Adenauer, who pledged themselves to Franco-German reconciliation.

Before seeking a third term, Merkel wants to carve out for herself a stature worthy of her great predecessors. At a meeting in November 2012, before heading to Norway to collect the Nobel Peace Prize for the European Union, President François Hollande (“Mr. Normal”) pouted, saying they were off to collect a prize won by the heroes of yesterday, Schuman, Monnet, and Adenauer. “But we must be heroes too,” retorted Angela Merkel, who all the same had badly mishandled the euro crisis in its infancy by refusing to exclude a bankruptcy among the member states of the monetary union.

A proper hero must suffer, and Angela Merkel is still demanding sweat and tears. In her New Year’s wishes she failed to mention the efforts of the Greeks and other peoples of Latin Europe hit by the euro crisis. But, before wishing her compatriots “God's blessing,” she quoted the Greek philosopher Democritus (460-370 BC): “Courage is the beginning of an action, but chance is the master of the end.”

Diverging fortunes

To listen to their Chancellor, though, the Germans are close to happiness. While France is tearing itself apart, yesterday over Nicolas Sarkozy, and today over the 75 per cent-tax fugitives and gay marriage, the German Chancellor embodies a united nation.

On December 31, Angela Merkel told a story. A schoolboy from Heidelberg, she said, had been persuaded by his friends on the football team not to drop out of school: in Germany, the success of an individual is success for the whole group. And what a success! Unemployment is at its lowest level since reunification, and was halved under the mandate of Angela Merkel; the country has already created 416,000 jobs in 2012. Many Germans have never not had a job.

The same evening, François Hollande tried to convince his countrymen that unemployment, which had risen 19 months in a row, was finally reducing at year’s end. But the happiness Angela Merkel speaks of is deserved. To keep it, we must persevere. Without waiting for the Epiphany, which marks the start of the German political season, Germany’s Finance Minister, Wolfgang Schäuble, has announced new savings measures.

He’s a rude partner for François Hollande, who is hoping not to spend too much time in Angela Merkel’s company. With an approval rating of 70 per cent, Angela Merkel is more popular than ever. For François Hollande, that means he’ll have to pretend to get on gloriously with the Chancellor.

Bienvenue Germanophobia

The French and German Ministries of Foreign Affairs are organising a superb hypocrites’ ball in Berlin on January 21 and 22, the 50th anniversary of the Elysée Treaty. The populations of the two countries are entitled to the usual refrains: the Franco-German ministerial council, and speeches from Angela Merkel and François Hollande to the Reichstag. The highlight of the festivities will be a concert at the Berlin Philharmonic. And that's all.

The media coverage of the event will seek to reveal a Franco-German policy initiative, but the two leaders have not put forward anything major. On the contrary, there will be some chomping at the bit on both sides of the Rhine: the Germans despise the French economic laggards, while when it comes to German power the French are yelling loud and clear.

Germans are accused of wanting to kill off Peugeot, of failing to recognise French superiority in the space industries, in weather forecasting, and so on.

Angela Merkel has grand airs, Germany has a touch of the imperialist power about it, and France is on the ominous road to Germanophobia.

Translated from the French by Anton Baer

On the web

View from Germany
Arguing to move forward

“Arguments make friends.” The real strength of the Berlin-Paris relationship is derived from their eternal disputes, says Die Welt am Sonntag.

Certainly, remarks the Sunday edition of Die Welt, there is a lot separating the French and the Germans. The former view their “twosome” as the union of the bare-chested and beautiful Marianne, and her undying thirst for liberty, with the mustachioed, boot-sporting Bismarck, with his gift for power. The latter prefer the more technical metaphor of the “Franco-German motor”. But differences like these can be advantageous:

Unity alone cannot guarantee progress for Europe. Adenauer and De Gaulle were always bickering about relations with America and European autonomy. Kohl and Mitterrand argued about reunification and the euro. There have always been tensions about all kinds of things. But in the end there was always a compromise to enable Europe to move forward.

According to WamS, this was the spirit of the Elysee Treaty, which aimed to have a maximum number of citizens versed in the language of the other country and permanent contacts at every level.

This is how Europe developed into a unique network where no one has to give up their identity. And this also explains why France and Germany still have the role of leaders in Europe. They do not form an exclusive bilateral association. Rather they are exemplary in the manner in which they take opposing sides on major issues in the union — and thus draw in the other countries.

**Panda** Tue 22 Jan - 10:19

22 January 2013 Last updated at 01:31
Farmers could get paid twice over for 'greening' New EC Thread - Page 26 _49353261_007788859-1

By Roger Harrabin Environment analyst
New EC Thread - Page 26 _65424052_65424014

The European Commission is in the process of reforming agricultural policy
Continue reading the main story
Related Stories

Plans to force Europe’s farmers to earn their subsidies by protecting the environment are under attack by MEPs.

The European Commission is attempting to reform the EU’s agriculture policy, under which farmers get subsidies based on the amount of land they own.

The Commission says part of their subsidy should be tied to environmental benefits like, say, leaving a portion of arable land uncultivated.

But many MEPs are fighting the proposed changes.

And some are backing an amendment which would effectively see farmers get paid twice over for protecting the environment.

Green campaigners say the double payment row is further sullying the reputation of the already-controversial Common Agricultural Policy (CAP).

Continue reading the main story
“Start Quote

It may sound bizarre to hear that some people are proposing double payments for farmers, but it's true”

End Quote David Baldock IEEP
Tony Long from WWF said: “Already the CAP is struggling to win public legitimacy. Citizens don’t understand why many farmers are receiving blank cheques while destroying the environment.

“If double payments are being introduced taxpayers will feel that they have been cheated.”

The double payments row applies to farmers who currently get a direct payment for owning land - about £200 ($316; 237 euros) per hectare - then top it up with an extra stewardship grant for farming environmentally, which is typically another £80 a hectare. That gives them, say, £280 a hectare from the taxpayer.

Under the Commission’s reform they would be expected to protect the environment anyway as part of their £200 direct payment. To win an extra £80 they would need to do more green good deeds.

According to the Institute for European Environment Policy (IEEP), some MEPs want these farmers to be able to continue collecting the full £280 in future – but without having to work any harder for it.

The IEEP says in a paper that this effectively means they will be paid twice for the same activity.

“It may sound bizarre to hear that some people are proposing double payments for farmers, but it’s true,” said David Baldock, the institute’s director, told BBC News. “This would be illegal and really does have to be quashed.”

I understand the UK government believes that the double funding amendment may be passed when it is voted on Wednesday and Thursday. If it succeeds, it will be resisted fiercely by the Commission (and the UK) in ongoing negotiations which are supposed to be settled by the summer.

A Commission spokesman said: "We will strongly oppose double payments - this is not what the EU budget is for."

But a source close to the negotiations told me: “The amendment is worded in such a way that it may be very difficult for the Commission to unpick. Some MEPs and member states want their farmers to keep getting the same subsidies for doing pretty much the same.”
Cheaper scheme
The complex mix of views from nation states, MEPs and the Commission renders agricultural reform almost impossible.

The UK government says the Commission’s proposals do not go far enough. Ministers want direct payments radically reduced, and say the Commission’s attempt to “green” the CAP are a device to keep farm subsidies high overall.

They want a much cheaper and simpler scheme that is less complex to administer.

Conservative MEP Julie Girling, who represents South-West England, is a member of the European Parliament Agriculture Committee. “We think the greening is greenwash,” she told BBC News.

“The process in Parliament is extremely complicated. We are voting on a series of elaborate compromises which contain many elements each – so it may well be that at the end of the day we will have voted for double payments. If that’s the case we will have to get it taken out at a later stage. This reform process is in danger of taking policy two steps backwards.”

The IEEP is critical of the “greening” plan, too. It says the rules are too vague and that tying 30% of subsidies to environmental services under direct payments is arbitrary and unrelated to the impact of what those services might be.

MEPs backing the double payments were not available for comment at the time of writing.

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