EU

Politics:

• Analysis

  EU politics: Finance ministers' meeting ends in deadlock

  EU politics: Finance ministers' meeting ends in deadlock

  FROM EUROPEAN VOICE

  Eurogroup will reconvene on Monday as differences on Greece's bail-out remain

  The eurozone's 17 finance ministers broke off talks in the early hours of this morning having failed to reach a deal on Greece's next bail-out instalment despite discussions lasting more than ten hours.

  Officials said that the meeting had made progress in resolving some of the technical issues surrounding what is expected to be a loan of €31.5 billion but that more work needed to be done. Ministers will meet in Brussels again on Monday (26 November) to try to make a breakthrough.

  Today's meeting followed scheduled talks last Monday (12 November) that also broke up without agreement.

  In a statement, Jean-Claude Juncker, the prime minister of Luxembourg and chairman of Eurogroup meetings, said: "The Eurogroup [eurozone finance ministers] has had an extensive discussion and made progress in identifying a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt.

  "The Eurogroup interrupted its meeting to allow for further technical work on some elements of this package." A press conference scheduled for the conclusion of the meeting was cancelled.

  Many of the 17 finance ministers had expressed hope going into the meeting on Tuesday evening that agreement would be reached, but the issue of how long Greece should be given to reduce its debt remains a major sticking point.

  Finance ministers want to give Greece until 2022 to bring Greece's debt to down to120% of gross domestic product (GDP). The International Monetary Fund (IMF) wants to stick to the original target date of 2020, but because the situation in Greece has deteriorated this would end up costing eurozone countries more money.

  When he left the meeting, Juncker said that there were "no major political disagreements".

  © 2012 European Voice. All rights reserved.

  November 21, 2012

• Background

  EU: Key figures

  Jose Manuel Barroso

  President of the European Commission. Born in 1956, he holds degrees in law and economics from the universities of Lisbon and Geneva (Switzerland) and did doctoral research at Georgetown University in Washington. As a student under the Salazar dictatorship, he led an underground Maoist party, but later joined the centre-right Social Democrats, serving as prime minister of Portugal from 2002 before being nominated by EU leaders in June 2004 and confirmed by the European Parliament as head of the Commission. Mr Barroso has been competent and has mostly avoided antagonising governments. He is expected to seek a second term in 2009-14.

  Hans-Gert Pottering

  President of the European Parliament (European People's Party-European Democrats—EPP-ED, Germany). Born in 1945, he studied law and politics at the universities of Bonn and Geneva. Elected at end-2005 for a term of two and a half years, that is, the second half the parliamentary term, until the June 2009 election. As president, he oversees all the work of Parliament, presides over plenary debates and co-signs all legislative acts adopted under the co-decision procedure. At the start of each EU summit meeting, the president sets out Parliament's point of view and its concerns as regards items on the agenda and other subjects. He has given priority to inter-cultural dialogue with the Arab-Islamic world.

  Jean-Claude Trichet

  President of the European Central Bank (ECB). Born in 1942, he is a graduate of the elite schools Sciences Po and the Ecole nationale d'administration (ENA). As governor of the Banque de France from 1993, Mr Trichet served on the original ECB governing council from 1998 before succeeding to the presidency in 2003. He has resisted political pressures to compromise the ECB governing council's independence and has during most of his term taken a cautious approach to monetary policy, with the focus on restraining inflation. Since the beginning of the crisis in international financial markets he has, however, taken a leading role in acting to mitigate the impact of the credit crunch on the economy, notably by the provision of ECB funding to banks to maintain bank lending.

  November 14, 2008

• Structure

  EU: Political structure

  Official name

  European Union (EU)

  Basic form

  A Union of democratic member states each with its own parliament. Certain powers are conferred on the EU by its member states. Those not conferred remain with the member states. Each member state has the right to leave

  Legal system

  Based on the Treaty of Rome (signed 1957), the Single European Act (1986), the (Maastricht) Treaty on European Union (1992), the Treaty of Amsterdam (1997) the Treaty of Nice (2001) and the Treaty of Lisbon (2007). EU law is applied by courts of member states; appeals and special cases referred by courts are heard by the European Court of Justice

  Legislature

  Council of the European Union (Council of Ministers), consisting of ministers of each member state, and European Parliament of 754 members

  Parliamentary elections

  Last elections, June 4th-7th 2009; next elections June 2014

  Executive

  The European Council, comprising heads of state and government, makes strategic policy. Its president for two and a half years from January 2010 is Herman van Rompuy. The separate Council of Ministers combines legislative and executive functions and meets either as the general affairs council (foreign ministers), Ecofin (economy and finance ministers) or as councils bringing together other ministers; votes are carried either by unanimity or by a qualified majority (about two-thirds). The Commission negotiates trade agreements, has responsibility for ensuring observance of treaties and legislation, and drafts new legislation. The present college of commissioners, comprising one from each of member state, took office on February 10th 2010

  Main political parties and groupings in parliament

  European People's Party (Christian Democrats and similar centre-right parties) (EPP, 271 seats); Coalition of Socialists and Democrats (S&D, 190); Alliance of Liberals and Democrats for Europe (ALDE, 85); Greens/European Free Alliance (58); European Conservatives and Reformists (ECR, 53); European United Left/Nordic Green Left (EUL/NGL, 34); Europe of Freedom and Democracy (EFD, 33); not at present in a recognised group (30)

  Council presidency

  Denmark (January-June 2012); Cyprus (July-December 2012); Ireland (January-June 2013)

  President of Parliament

  Martin Schulz was elected in January 2012 for a two-and-a-half-year term

  Commission president

  José Manuel Durão Barroso

  Key commissioners

  Agriculture: Dacian Ciolos

  Competition: Joaquín Almunia

  Economic & monetary affairs: Olli Rehn

  Energy: Günther Oettinger

  Enlargement: Stefan Fule

  Environment: Janez Potocnik

  External trade: Karel De Gucht

  Foreign affairs: Catherine Ashton

  Home affairs: Cecilia Malmstrom

  Internal market: Michel Barnier

  Research, science & innovation: Maire Geoghegan-Quinn

  President of the European Central Bank

  Mario Draghi

  March 20, 2012

• Outlook

  EU politics: Commission says it will fight to have justice vetoes lifted

  By Judith Crosbie

  The European Commission has admitted it will have a fight on its hands to get member states to lift their vetoes on justice issues. "We have had some resistance, to be honest," Commission President Jose Manuel Barroso said yesterday (28 June) at the publication of the plan to give the EU more powers on police and judicial co-operation.

  Germany, Ireland and Slovakia have expressed doubts to the Commission about the 'bridging clause' which would see certain justice matters come under community law rather than intergovernmental law. This would mean greater involvement of the European Parliament and the European Court of Justice (ECJ) and the possibility of using qualified majority voting, instead of unanimity.

  But both Barroso and Franco Frattini, the commissioner for justice, freedom and security, insisted vetoes should be abandoned to allow them to address the security concerns of citizens.

  Barroso said that despite some governments' resistance the Commission had "strong support from the European Parliament and public opinion".

  "We understand it is a sensitive issue", Barroso said, while Frattini referred to "traditional national jealousies" over justice matters.

  "We don't expect agreement immediately but we hope the debate will give more arguments for those countries with doubts to come on board," Barroso said.

  The Commission has been prompted to propose using the bridging clause following stiff opposition among some justice ministers to certain proposals. A plan to speed up and make easier the collection and transfer of evidence between member states was blocked in the Council for three years before being approved earlier this month. A proposal to introduce minimum standards for suspects is still blocked in the Council.

  But the bridging clause will be subject to the approval of all 25 member states and will then have to be ratified by national parliaments. In some cases, such as France, there will be a need to change national constitutions.

  Because the German parliament has already ratified the constitutional treaty - which goes even further than the bridging clause on police and judicial co-operation on criminal matters - the idea of ratifying a specific plan on this is not going down well in Berlin.

  But there is another reason why the proposal is opposed. Germany and Ireland believe the constitution was agreed as a package and while they may not have particularly liked the idea of lifting their vetoes on justice matters there were other clauses in the treaty that they felt went their way. Despite the fact that the 1998 Amsterdam treaty allowed for this bridging clause, long before the now derailed EU constitution, both states are adamant that it should not be adopted separately from the constitution.

  The Commission published three other communications on how the EU could make progress on justice matters. One involved allowing a national court where a case is initially taken to refer points of interpretation of EU law to the ECJ when the case involves co-operation in civil matters, asylum, immigration, visas and the free movement of people. This means citizens would be able to get a quicker and less costly judgement on EU-wide law from the ECJ than currently exists in most countries, where only the highest national court can refer such cases.

  The Commission also reported on the progress on implementation of what member states agreed to achieve in the area of justice, freedom and security and proposed a mechanism for evaluation of EU policies in these areas. Frattini said the adoption of EU decisions into national law was slow and while he did not believe in "naming and shaming" governments it was "very important to help and encourage member states to implement key measures". Only five states - Austria, Belgium, Denmark, the Netherlands and Spain - have implemented a framework decision on combating child porno-graphy and only Spain has imple-mented a decision, taken four years ago, on cross-border investi-gation teams.

  June 29, 2006

Economy:

• Background

  EU: Economic background

  EU27 Gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture, fishing & forestry	2.2	2.2	1.9	1.8	1.8
  Industry	20.5	20.4	20.2	20.2	20.1
  Construction	5.7	5.8	6.0	6.2	6.5
  Services	71.6	71.6	71.9	71.8	71.6
  Source: Eurostat.

  Download text file (csv format)

  November 14, 2008

• Structure

  EU: Economic structure

  Economic structure: Annual indicators, EU27

  	2007	2008	2009	2010	2011
  GDP at market prices (€ bn)	12,398	12,467	11,752	12,256	12,649
  GDP (US$ bn)	16,996	18,332	16,374	16,271	17,582
  Real GDP (% change)	3.2	0.2	-4.2	2.0	1.5
  Consumer price inflation (av; %)	2.4	3.6	0.8	2.1	3.1
  Population (m)	494.9	496.5	497.8	499.1	500.5
  Current-account balance (US$ bn)	-91.2	-180.4	-21.3	-28.5	-29.7
  Exchange rate US$:€ (av)	1.37	1.47	1.39	1.33	1.39

  Download the numbers in Excel

  Origins of GDP 2010	% of total	Components of GDP 2010	% of total
  Agriculture, forestry & fishing	1.7	Private consumption	58.4
  Manufacturing, mining & utilities	18.7	Government consumption	22.1
  Construction	6.0	Fixed investment	18.5
  Financial, property & business services	28.9	Stockbuilding	0.2
  Wholesale & retail trade, transport, communications	20.9	Exports of goods & services	40.5
  Public, social & personal services	23.9	Imports of goods & services	39.7
  GDP at factor cost	100.0	GDP at market prices	100.0
  Principal exports 2010	€ bn	Principal imports 2010	€ bn
  Machinery & transport equipment	573.0	Mineral fuels and raw materials	445.6
  Other manufactures	310.8	Machinery & transport equipment	443.5
  Chemicals	235.9	Other manufactured goods	360.5
  Mineral fuels and raw materials	110.5	Chemicals	137.5
  Food, drink & tobacco	76.3	Food, drink & tobacco	80.7
  Main destinations of exports 2010	% of total	Main origins of imports 2010	% of total
  US	18.0	China	18.8
  China	8.4	US	11.3
  Switzerland	7.8	Russia	10.5
  Russia	6.4	Switzerland	5.6
  Turkey	4.5	Norway	5.3
  Japan	3.2	Japan	4.3

  Download the numbers in Excel

  Download text file (csv format)

  March 20, 2012

• Outlook

  EU: Country outlook

  EU: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Financial, business and political sentiment have improved since the start of 2012 following the unprecedented injection of liquidity into regional lenders by the European Central Bank (ECB). But political resistance to taking the steps deemed necessary to address the multi-faceted crisis in the euro zone--a consequence of a fragile and undercapitalised banking system, high levels of public and private indebtedness, uncompetitive economies with low-growth potential and a flawed structural framework--remains strong. If the euro zone is to hold together, greater financial resources will need to be devoted to managing the inevitable future stresses in bond markets and weak banking systems. Indeed, any lasting solution to the crisis of confidence in the euro zone is still likely to require some degree of debt mutualisation. Agreement on a proposed new intergovernmental treaty to tighten fiscal rules represents a necessary (but not sufficient) step to ensure continued support from Germany (the dominant creditor nation) for financial assistance to struggling euro zone states. Ratification by national parliaments of the "fiscal compact" is expected by mid-2012, although a requirement for Ireland to hold a referendum could arouse political tensions (Irish voters having twice rejected previous European treaty changes, in 2001 and 2008). Another "no" vote would undoubtedly damage Ireland's position within the euro zone, with potentially serious economic and financial consequences.

  ELECTION WATCH: No European Parliament elections are scheduled in the forecast period. National elections will, however, be held in the three largest euro zone countries. In France, presidential and parliamentary elections will take place over April-June 2012. In Italy a general election is due by April 2013 (it could occur earlier if the interim "technocratic" government of Mario Monti loses the support of parliament) and in Germany a general election will be held in September 2013. Greece will also hold a general election in 2012, currently scheduled to take place before mid-April.

  INTERNATIONAL RELATIONS: The euro zone crisis has weakened the EU's already feeble efforts to project a common foreign policy, with little benefit likely to be seen from the establishment in early 2011 of a new European External Action Service (EEAS) intended to bridge the previous divide between political external relations and economic external relations. With regard to all major international issues, the larger EU member states will continue to take the lead. Events in the Arab world since the beginning of 2011 have presented the EU with a challenge to provide moral support, which it will do, albeit limited by the EU's domestic problems. The intensification of repression in Syria and tensions with Iran over its nuclear programme will test the EU's ability to present a common position and mount an effective response.

  POLICY TRENDS: Huge liquidity injections by the ECB since late 2011 have, for the moment, stabilised financial markets and allowed the region to step back from the brink of an economic collapse. The intervention achieved two goals. First, it has reduced funding strains in interbank markets, which--as occurred after the Lehman Brothers crisis of 2008--were threatening to shut down key parts of the global financial system. Second, and equally important, it signalled that the ECB is willing to take extraordinary action to defend the euro zone (which was previously an unknown in the minds of investors). However, although financial market sentiment has rebounded, none of the underlying, medium-term factors weighing on regional growth prospects have disappeared. Debt levels (public and/or private) in many countries remain high, banks are still undercapitalised, austerity measures will exacerbate recession, and a lack of cohesion--and effective governance--within the single-currency zone is as much of a threat to sustained growth and orderly markets as it has ever been. The travails of Greece and Portugal are a salutary reminder of the structural challenges faced by the euro zone periphery to restore competitiveness and solvency. These challenges are reflected in macroeconomic imbalances within the euro zone (exemplified by large current-account surpluses in Germany and other core countries and large deficits in much of the periphery). The policy response, which is largely shaped by Germany, continues to emphasise fiscal rectitude and structural reforms. Both of these are necessary for the long-term survival of the single currency. But in the short term, there is an argument for Germany to help other member states by adopting a looser fiscal stance to stimulate domestic demand. In at least some of the euro zone periphery there is a danger that, in the drive to become fiscally virtuous, fiscal policy will become damagingly procyclical, exacerbating recession and straining rather than improving debt dynamics.

  ECONOMIC GROWTH: During 2010 and early 2011 the region made a moderate recovery from the deep recession of late 2008 and 2009, but activity weakened steadily throughout last year as the euro crisis escalated, resulting in a 0.3% contraction in GDP in both the euro zone and EU27 in the final quarter of 2011. The fallout from last year's financial shocks and a rolling wave of austerity will push the euro zone into a moderate recession in 2012, but unprecedented monetary policy action has, for a time at least, stabilised markets and allowed the region to step back from the brink of an economic slump and severe banking crisis. Business and consumer sentiment nevertheless remain depressed and fiscal tightening will remain a serious drag on growth, particularly in more stressed peripheral economies (in early 2012 survey data for Spain and Italy showed steeper falls in output and new orders). Despite the reduction in financial market risk and an improved economic picture in Germany since late 2011, the Economist Intelligence Unit forecasts that euro zone GDP will contract slightly in the first quarter of 2012 and decline more sharply in the second quarter, with output and demand levelling out at a weak level in the second half. For 2012 overall, euro zone GDP should fall by 0.7% (EU27: -0.6%).

  INFLATION: Inflation rose steadily from an average of 0.3% in the euro area (EU27: 1%) in 2009 to 1.6% in 2010 and 2.7% in 2011 (EU27: 3.1%). Although it has eased back slightly since late 2011, the rate has remained rather above expectations as a result of higher energy costs, and to a lesser extent other commodity prices and indirect tax increases. Growing tension between Iran and the West represents a significant risk to the near-term oil price outlook. Assuming no major shocks occur, the effects of subdued domestic demand, ongoing fiscal austerity and weakening labour markets on wage rates should bring the inflation rate down gradually during 2012-13. Wage rates rose moderately in 2010 and a little faster in 2011, but should slow in 2012-13. We forecast that euro area headline inflation will average 2.1% in 2012 and 1.9% in 2013, with EU rates a little over 2%.

  EXCHANGE RATES: Although not our central forecast, there is a high risk that several countries will be forced to leave the euro zone during the next two years. Even assuming that it survives in its present form, the euro will remain volatile in response to the region's debt and banking crises. The euro weakened for much of 2011, from a peak of US$1.46:EUR1 in April to US$1.26:EUR1 in mid-January 2012, but was trading around US$1.31:EUR1 in early March. Given persistent uncertainty over sovereign debt sustainability and banking solvency issues, we expect it to depreciate further in 2012-13. We project rates of US$1.28:EUR1 in 2012 and US$1.24:EUR1 in 2013, while recognising significant risks of sharp movements in either direction.

  EXTERNAL SECTOR: The overall external sectors of the euro zone and EU27 are close to balance and we expect that there will be only marginal changes over the forecast period. Within EU27 there are major imbalances, with Germany, Netherlands and Sweden having substantial surpluses compared with significant deficits for southern Europe, as well as France and the UK. Some of these imbalances will be alleviated, but not eliminated, during the forecast period.

  March 09, 2012

View detailed map

Country Briefing

Area

EU27: 4,215,100 sq km

Population

EU27: 501m (2011 estimate)

Population density

EU27: 118 people per sq km

Main cities/conurbations

Population ('000)

Brussels: 1,031 (2007)

Paris region: 10,143 (2006)

Greater London: 7,754 (2009)

Berlin: 3,432 (2008)

Madrid: 3,132 (2007)

Rome: 2,547 (2006)

Warsaw: 1,710 (2008)

Languages

Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, Gaelic, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Polish, Portuguese, Romanian, Spanish, Slovak, Slovenian and Swedish are official EU languages. English and French are the languages used most within the EU administration

Weights and measures

Metric system

Currencies

A total of 17 member states (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Spain and Slovenia) share in an economic and monetary union (EMU) with the euro as the single currency

Fiscal years

Calendar years for all EU members, except the UK and Ireland (April to March)

Time

There are three time zones. In the winter, Ireland, Portugal and the UK are on Greenwich Mean Time (GMT); other countries' capitals are one hour ahead of GMT, except Estonia, Finland, Greece, Latvia and Lithuania, which are two hours ahead of GMT. In summer time, all clocks move one hour forward

March 20, 2012