Open Europe: The EU’s budget is unmanageable

Open Europe’s Mats Persson has a comment piece on EUobserver responding to a piece by EU Commissioner Siim Kallas regarding the EU budget and the European Court of Auditors’ annual report. Mats argues, “The fundamental problem of waste and mismanagement involving EU money lies primarily with the budget itself – not with the member states, although they should not entirely escape blame…Mismanagement and waste in the EU budget are two sides of the same coin. They both stem from the size, complexity and irrational nature of the EU budget. Both receive their thrust from the blurred line between spending and accountability, owing to the set-up of the EU’s budget programmes. And both can be radically reduced by simplifying the budget, cutting down on the spending and by repatriating a large chunk of regional spending and the CAP to member states.”


Mats concludes, “As Commissioner Kallas himself points out: ‘One cannot reasonably expect an EU official from an office in the Commission’s headquarters in Brussels to know what best fits the needs of a small town in the West Midlands – this is for the local authorities to say.’ Exactly, but this begs the question why in the world the EU is involved in regional spending and rural development in the first place?”


Meanwhile, Open Europe’s “50 new examples of EU waste” continues to receive coverage across Europe. Open Europe’s Sarah Gaskell appeared on Hungarian National Radio arguing that the examples demonstrate the need for a re-think of the EU budget, and that the Commission must take some responsibility for the waste in the budget.

EUobserver: Persson Dziennik TVN24 Transindex Mail: Utley


ECJ President accused of bias in judgement on British couple’s property case

PA reports that the UK’s Court of Appeal has been asked to consider whether the President of the European Court of Justice, Vassilios Skouris, was biased when he ruled in a land dispute which affects thousands of holiday home owners in Northern Cyprus. The article notes that Skouris headed a panel of EU judges which ruled that the British courts must enforce the decision of a southern Cyprus court upholding the property rights of a man forced to leave his land when Turkey invaded the north of the island. The ECJ ruling would mean that British couple David and Linda Orams would have to demolish their home in northern Cyprus on which they had spent their life’s savings and pay damages to the original land owner, Meletios Apostolides.


However, it was alleged at the Court of Appeal that Judge Skouris had close links with the President of Cyprus, who had bestowed the island’s highest honour on him, and this may have coloured his judgement.

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Estonian President throws his hat in the ring for EU top jobs;

Simon Jenkins: The EU’s intellectual insecurity means it treats anyone “but the most craven sycophant as an enemy”

EUobserver reports that Estonian President Toomas Hendrik Ilves has formally offered his name as a candidate for the top jobs created by the Lisbon Treaty, saying he is interested in both the EU President post and that of the EU Foreign Minister. El Mundo quotes Finland’s Foreign Affairs Minister Alexander Stubb saying, “we need a leader capable of managing 27 egos”.


The Telegraph quotes an eastern European diplomat saying: “Trying to work out who is going to be President of the EU Council is not dissimilar to decoding who was in or out in the Kremlin in the 1970s. It seems strange to many of us that 20 years after the fall of the Berlin Wall we have to dust off our Kremlinology skills here in Brussels”. The Economist’s Charlemagne blog argues, “If the EU sees any merit in having big, serving figures given these big new jobs, then opacity is the price to pay.”


Meanwhile, writing in the Guardian, Simon Jenkins suggests Gordon Brown should become EU President. He argues, “He [Brown] is clearly unhappy with the rough and tumble of democratic politics, with the daily grind of public appearances, glad-handing and schmoozing. But these are not required in Brussels, where nobody is elected to anything and such populism as smiling at cameras and holding referendums are anathema. Brown, dark-suited and anonymous, is a natural oligarch, his governing style attuned to the post-democratic statism of 21st-century Europe.”


He goes on, “An inability to think laterally has long been the curse of the European movement. A sign of its intellectual insecurity is that it cannot handle scepticism, treating any but the most craven sycophant as an enemy… Nothing in recent constitutional history has been more cynical – or more dangerous – than the fact that referendums voting yes to euro-integration are accepted and those that vote no are rejected…The language of the Lisbon treaty is that of an elite of 40 years ago, a smokescreen for the accretion of establishment power. David Cameron is right to keep open a determination to change it, as is indeed allowed by the treaty. The only sensible response to Lisbon is not rejectionism but a ferocious scepticism, properly so called.”

Guardian: Jenkins Irish Times Telegraph Economist: Charlemagne notebook EUobserver EurActiv ElMundo


EU funds for wind farms in the hands of the Sicilian mafia

Le Monde reports that four people were arrested and more than €153 million confiscated yesterday in Sicily and Campania due to fraud in the wind farms sector. The seven wind farms in question were partly paid for with public funds, including EU money. In order to qualify for public funding, the ‘entrepreneurs’ forged false documents to prove that they owned land and bloated the amount of capital that had to be matched by EU funds through fake invoices. The article notes that the mafia siphoned off a big chunk of the public subsidies.

Le Monde Open Europe press release Open Europe research


Hedge fund managers subject to stricter remuneration restrictions than banks under revised AIFM Directive  

The FT notes that last minute changes to the AIFM Directive, on the initiative of the Swedish Presidency, will see hedge fund managers subject to stricter remuneration restrictions than those proposed for banks. The Council of Ministers’ draft Directive now includes a three page annexe of provisions restricting remuneration policies, the article reports. “Whilst the new proposed remuneration policies look a lot like those that apply to the biggest banks, even medium-sized banks or big broker/dealers are not caught by the details in the way that hedge fund managers will be,” said Rob Moulton, a partner at the London law firm Nabarro Nathanson, according to FT. The Telegraph notes that the new rules could force managers to defer as much as 60pc of their annual pay.


This is Money cites Open Europe’s recent report on the AIFM Directive, showing that the hedge fund industry contributed £3.2 billion in tax revenues to the Exchequer in 2008. Meanwhile, the Evening Standard looked at growing fears that hedge fund managers will leave London, as a consequence of the 50pc tax rate and the AIFM Directive.

Open Europe research FT City AM WSJ This is Money Telegraph This is London


EU state aid rules delaying Government funding to UK industry

The Guardian reports that EU rules on state aid are delaying the completion of a crucial £140m Government loan to allow manufacturers to help build nuclear reactors at home and abroad. The article notes that Sheffield Forgemasters International is one of only three companies in the world able to make the special forgings for new reactors but UK ministers’ fear of breaching EU competition rules is making the funding process more drawn-out than expected. The Government has announced plans to build 10 new nuclear power stations in the UK in the next ten years but unions fear the timetable could now slip into next year with damaging consequences for the company.



Lord Myners warns EU Solvency II rules could discourage pensions saving

The FT reports that City Minister Lord Myners has said that new EU Solvency II capital rules for insurance companies could discourage people from saving for retirement by cutting the value of pensions. “The government has a social duty to the pensioners and future pensioners of the UK, and the industry has a robust technical basis for its concerns. I am committed to furthering the technical argument here and in Europe…to ensure that our social obligations are met”, he said. Industry members have suggested that the rules, which are to take effect in 2012, could cut the value of defined contribution pension schemes by up to 20 percent because of the effect on their annuity businesses.



Commission delays overhaul to ‘fair value accounting’ rules

The FT reports that the Commission has delayed the introduction of an overhaul of ‘fair value accounting’ rules for banks and insurers which yesterday came into force across most of the rest of the world, except the US. Accountants say the reforms would provide greater clarity in determining which bank assets must be marked to market. However, Douglas Flint, HSBC’s Chief Financial Officer, had told the Commission a delay could place European companies “at a competitive disadvantage” to international peers.



Fraser Nelson: Cameron should unilaterally refuse to implement burdensome EU directives

In the Spectator, Fraser Nelson looks at “how David Cameron can win in Europe”, saying that, instead of going the “slow diplomatic route” by seeking to repatriate powers, a Conservative government could simply unilaterally refuse to implement certain directives deemed particularly burdensome, or “stop making the situation worse” by adding to the original requirements in an EU law. Looking at the strength of feeling on Europe within the Conservative Party, Nelson concludes, “Activists have become more aggressive, less reverential, forming a stronger bond with the constituency groups and a weaker one with Tory HQ. Crucially, Mr Cameron knows just how deep this issue runs for many of his present and future MPs. This is not about Europe, but about big government and the duty to resist it. Fighting for Britain, fighting for public opinion and fighting against the unelected officials of the European Union is what a lot of them genuinely believe they have been sent to parliament to do.”

Spectator: Nelson


Times: Not a penny of EU money should make it to the BNP – or any other parties

There is continued coverage of the news that the BNP is set to receive EU funding for forming a new far-right alliance with other parties, including France’s National Front. A leader in Times argues, “The grasping BNP has, nevertheless, underlined an outrage. Why should there be funding for any pan-European parties? MEPs are heavily subsidised as it is, so why are we paying to fund the consolidation of political parties across Europe? Who voted for this nonsense? Not a penny should make its way to the BNP’s coffers — or to anyone else’s either.” 

Times: Leader Times Guardian: Muir Mirror BBC EUobserver


MEPs yesterday demonstrated how their new powers over justice and home affairs may work under Lisbon Treaty, tabling almost 500 amendments to a resolution on the EU’s proposed five year programme in this field, known as the “Stockholm Programme”. 

EP press release Open Europe press release Open Europe research


The Economist’s Charlemagne column notes that former EU Internal Market Commissioner Mario Monti has been commissioned to write a study of the single market and notes that he talks of curbing tax competition, with minimum tax rates in exchange for deepening the single market. It suggests that such a bargain would require “political good faith… European politicians admitting that both [liberalism and social safety nets] are needed to create a fair, just society: a tall order.” 



When asked whether he supported the creation of an EU army, in an interview with El Mundo, European Parliament President Jerzy Buzek said, “I believe that it is necessary [to have an EU army]”.

El Mundo El Mundo 2


Four member states stall EU data sharing with US on bank transactions

Euobserver reports that opposition from four member states to a draft agreement between the EU and US allowing the use of banking data in anti-terrorist investigations is likely to delay a decision until after the Lisbon Treaty enters force on 1 December, which would draw the EP into the decision making process. Citing data privacy concerns, Germany, Austria, France and Finland are opposing the text negotiated by the Swedish EU Presidency and the European Commission allowing American authorities access to information from the Society for Worldwide Interbank Financial Telecommunication (Swift) – the interbank transfer service.



In a letter to the Economist, leader of the Conservatives in the European Parliament, Timothy Kirkhope MEP, defends the party’s new grouping in the EP writing, “British Conservative influence is growing in Brussels thanks to the ECR and I am proud of our accomplishments in its first few months.”

Economist: Letters


Euractiv reports that MEPs this week urged EU member states to step up their efforts to ensure the Services Directive is implemented into national law within the agreed deadline of 31 December 2009 and that they implement it correctly.



The Netherlands is ready to remove its opposition to Serbia’s bid to join the European Union if a coming report says the Balkan nation is cooperating fully with the international war crimes tribunal in The Hague, a Dutch Foreign-Ministry spokeswoman said yesterday.



The Irish Times reports that the Irish government has set its sights on the budget and innovation portfolios in talks over Ireland’s seat in the next EU Commission.

Irish Times


EUobserver reports that EU members who are signatories to the Kyoto protocol are on course to meet their commitments to cut emissions of six greenhouse gases by eight percent from 1990 levels over the 2008-2012 period. However, Ireland, Italy, Portugal and Spain will not meet their targets and it is only through offsetting their emissions that they can claim to have met their obligations.



The IHT notes that many European banks are vulnerable to “increasingly dubious shipping industry loans” worth more than $350bn, the risk highlighted by the recent bankruptcy of US shipping firm Eastwind.

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The Times reports that a study by the Institution of Mechanical Engineers says that Britain’s legally binding target to cut emissions by 80 percent by 2050 is an “act of faith” with no grounding in reality.





Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: or call us on 0207 197 2333.



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