June 28, 2017

Europe Agrees on New Banking Rules

Instead of putting those losses on states, and taxpayers, the new system specifies the order in which banks’ investors and creditors, and then their uninsured depositors, will face losses.

“For the first time we agreed on a significant bail-in to shield taxpayers, to break the vicious circle of sovereigns and banks, and to induce banks to behave more responsibly,” Jeroen Dijsselbloem, the Dutch finance minister, said in a statement.

Margrethe Vestager, the Danish economics minister, reinforced the agreement on Twitter, writing that there was a “general political agreement” on “crisis management of banks.”

The agreement to “bail in” rather than bail out failing banks represented a revolution in the way that the European Union addresses the kinds of crises that have in recent years crippled places like Cyprus and Ireland and threatened to sink the euro.

The breakthrough allows leaders of the European Union’s 27 member states to endorse the deal at a summit meeting, which begins Thursday afternoon and is their last scheduled meeting before the summer hiatus.

The deal also avoids another impasse that would have reinforced the growing sense that Europe’s economic project has become unmanageable, even as the bloc is about to expand to 28 countries with the admission of Croatia next Monday.

It was the second time in the space of a week that ministers held a marathon, late-night meeting to reach a deal to curtail recourse to public money for bank rescues.

At the previous session last week in Luxembourg, ministers were divided sharply over how, and whether, to give countries discretion to protect certain classes of creditors. France, Britain and Sweden favored such flexibility.

But Germany and the Netherlands were wary of giving governments such wide discretion, fearing that it could induce risky behavior if bankers were overly confident of relying on mechanisms like national bailout funds to come to their rescue.

Germany was also wary of endorsing new rules that could eventually mean the use of shared European funds before national elections in September.

The banking effort by the ministers was aimed at curtailing the so-called doom loop, in which struggling governments take their states deeper into debt to shore up their banking systems. The initiatives under discussion could become important building blocks for the banking union, including establishing a single supervisor to oversee about 150 of the bloc’s largest lenders.

The uncertainty over the outcome — and the failure by leaders to live up to their stated commitment to agree on ways to further integrate the management of their economies — had been clouding the agenda for the meeting, which begins later on Thursday. Herman Van Rompuy, the president of the European Council, who sets the agendas for meetings of the bloc’s leaders, said on Wednesday that he planned to focus much of the attention on curbing high youth unemployment. Unemployment is more than 12 percent across the euro area, while youth unemployment is close to 60 percent in Spain and Greece.

During their meeting, the leaders are expected to discuss spending 6 billion euros, or $7.9 billion, over the next two years to fight youth joblessness, instead of over a seven-year period, according to a draft copy of the leaders’ conclusions. That money would help pay for what is described as a youth guarantee, which ensures that people under age 25 who lose their jobs, or do not find work after leaving school, get more education or training within four months.

Leaders, though, must reach a final deal with the European Parliament on the seven-year budget that is supposed to be source of that money. Even then, analysts say, they are skeptical about the leaders’ ability to significantly change the arc of youth joblessness during their two-day session in Brussels. In a bleak assessment, Marie Diron, a senior economic adviser at Ernst Young, forecast that euro area unemployment would peak at 20.5 million during the first quarter of next year, up from the current level of 19.4 million.

In Europe, “there is probably little that can be done that would significantly reduce youth unemployment in the short-term,” Ms. Diron wrote in a research note. The best medicine would be “better and wider use of apprenticeships” and “encouraging labor mobility between countries,” she wrote.

Article source: http://www.nytimes.com/2013/06/27/business/global/europe-agrees-on-new-banking-rules.html?partner=rss&emc=rss

European Vote on Bee-Harming Pesticides Is Inconclusive

The proposal was based on a recent report from the European Food Safety Authority recommending that no pesticide containing chemicals known as neonicotinoids be used on crops that are attractive to honeybees, because of the risk that the insects would be poisoned.

Frédéric Vincent, a spokesman for the European Commission, said that for the moment officials in Brussels, including the European health commissioner, Tonio Borg, would “reflect” on what steps to take next, adding: “This isn’t the end of the story.”

Mr. Vincent said the commission could go back to member states on the committee with a revised proposal for a new vote. Alternatively, he said, the commission could ask the member states to hold another vote on the same proposal, and were there to be no qualified majority, the proposal could be enacted under the authority of the European Commission, the executive arm of the European Union.

The commission has that power, Mr. Vincent said, because “in that case the member states wouldn’t be making a decision.”

The commission has used that power in other contentious agricultural cases, like in March 2010, when it approved the cultivation of a genetically modified potato in the face of public opposition.

In all, 13 countries voted in favor of the proposal, including France, Spain, Italy and the Netherlands. Nine voted against, and five abstained, including Germany and Britain.

Bees of all kinds, which are essential to agriculture and ecosystems, have been dying by the millions over the last decade for reasons that are not fully understood. Mites and viruses are among the major culprits, but studies have also suggested that the neonicotinoid pesticides are contributing to the problem.

The makers of the pesticides, including the German giant Bayer CropScience and the big Swiss biochemical company Syngenta, claim that the available scientific evidence does not justify broad restrictions.

Article source: http://www.nytimes.com/2013/03/16/business/global/europe-vote-on-bee-harming-pesticides-is-inconclusive.html?partner=rss&emc=rss

Barroso Urges Europe to Keep Cutting Debt

“Steadfast implementation of reforms is beginning to deliver results in terms of current accounts and regaining competitiveness,” the commission president, José Manuel Barroso, wrote in a letter to the leaders of the 27 members of the Union.

He sent the letter accompanied by charts that showed Ireland and Portugal as having benefited from rigorous turnaround programs, but that also showed countries including France, Italy, Belgium and Hungary as still plagued by high labor costs, compared with their trading partners.

He urged the European Union nations to remain wary of uneven economic performances across the bloc, lest the region continue to struggle with the imbalances that have contributed to Europe’s debt and economic crisis.

“When we look at productivity performance, we see that the very best member states are twice as productive as the lowest performers,” wrote Mr. Barroso, who as president of the commission is the top official in the administrative arm of the Union.

Mr. Barroso appeared to be delivering leaders a stark reminder that the problems that led to sovereign bailouts for Greece, Portugal and Ireland were still a cause for concern.

Mr. Barroso and colleagues like Olli Rehn, the E.U. commissioner for economic and monetary affairs, have been under a blistering assault from critics who say that enforcing strict budgetary targets to pay down debt and preserve the euro is creating a vicious cycle of low or no growth.

Mr. Barroso’s letter was evidently a response to such critics. He said that structural overhauls were contributing to a rebalancing of the E.U. economy, particularly where governments had undertaken the measures as part of their bailout agreements.

Ireland and Portugal had reversed trends in terms of their unit labor costs, which were now more favorable than before compared to their trading partners, according to the charts that accompanied Mr. Barroso’s letter. By contrast, according to the charts, unit labor costs in countries like France and Italy still were higher compared to those of their trading partners.

He also warned that a number of “states still need to invest more in structural reform to turn around their relative loss of competitiveness over several years.”

Mr. Barroso did acknowledge that there were deep and painful problems in pockets of the bloc, in particular in countries plagued by youth unemployment, and indicated that he would call for continued financial support to help address joblessness when he addressed E.U. leaders on Thursday evening.

The leaders will gather for what is essentially a check-in on the tougher budgetary surveillance they agreed upon over the last two years to combat the kinds of extreme debt and deficit problems in many countries that nearly brought down the euro currency union.

During the meeting Mr. Barroso is expected to show that the commission is willing to be flexible, by proposing that a number of states be given more time to meet their budgetary targets because of the lingering difficulties in the European economy.

Commission officials are prepared to recommend that Portugal, for example, be given one more year to meet its budget targets. And they say deadlines for meeting targets also could be extended in the cases of France and Spain, on condition that their governments could demonstrate progress in adopting fiscal overhauls.

The austerity debate could nonetheless produce friction at the summit meeting if, as expected, E.U. officials and Germany continue to emphasize regional financial consolidation, while the French, Italians and Spaniards continue to put far more emphasis on achieving economic growth.

President François Hollande of France is expected to lead the pro-growth faction, supported by the leaders of two big and struggling countries in Southern Europe: Mariano Rajoy of Spain and Mario Monti, who will represent Italy at the meeting despite having lost out in recent elections.

This article has been revised to reflect the following correction:

Correction: March 12, 2013

A capsule summary with an earlier version of this article misstated the number of countries in the European Union. It is 27, not 17.

Article source: http://www.nytimes.com/2013/03/12/business/global/barroso-urges-eu-to-keep-cutting-debt.html?partner=rss&emc=rss

Barroso Urges E.U. to Keep Cutting Debt

“Steadfast implementation of reforms is beginning to deliver results in terms of current accounts and regaining competitiveness,” the commission president, José Manuel Barroso, wrote in a letter to the leaders of the 27 members of the Union.

He sent the letter accompanied by charts that showed Ireland and Portugal as having benefited from rigorous turnaround programs, but that also showed countries including France, Italy, Belgium and Hungary as still plagued by high labor costs, compared with their trading partners.

He urged the European Union nations to remain wary of uneven economic performances across the bloc, lest the region continue to struggle with the imbalances that have contributed to Europe’s debt and economic crisis.

“When we look at productivity performance, we see that the very best member states are twice as productive as the lowest performers,” wrote Mr. Barroso, who as president of the commission is the top official in the administrative arm of the Union.

Mr. Barroso appeared to be delivering leaders a stark reminder that the problems that led to sovereign bailouts for Greece, Portugal and Ireland were still a cause for concern.

Mr. Barroso and colleagues like Olli Rehn, the E.U. commissioner for economic and monetary affairs, have been under a blistering assault from critics who say that enforcing strict budgetary targets to pay down debt and preserve the euro is creating a vicious cycle of low or no growth.

Mr. Barroso’s letter was evidently a response to such critics. He said that structural overhauls were contributing to a rebalancing of the E.U. economy, particularly where governments had undertaken the measures as part of their bailout agreements.

Ireland and Portugal had reversed trends in terms of their unit labor costs, which were now more favorable than before compared to their trading partners, according to the charts that accompanied Mr. Barroso’s letter. By contrast, according to the charts, unit labor costs in countries like France and Italy still were higher compared to those of their trading partners.

He also warned that a number of “states still need to invest more in structural reform to turn around their relative loss of competitiveness over several years.”

Mr. Barroso did acknowledge that there were deep and painful problems in pockets of the bloc, in particular in countries plagued by youth unemployment, and indicated that he would call for continued financial support to help address joblessness when he addressed E.U. leaders on Thursday evening.

The leaders will gather for what is essentially a check-in on the tougher budgetary surveillance they agreed upon over the last two years to combat the kinds of extreme debt and deficit problems in many countries that nearly brought down the euro currency union.

During the meeting Mr. Barroso is expected to show that the commission is willing to be flexible, by proposing that a number of states be given more time to meet their budgetary targets because of the lingering difficulties in the European economy.

Commission officials are prepared to recommend that Portugal, for example, be given one more year to meet its budget targets. And they say deadlines for meeting targets also could be extended in the cases of France and Spain, on condition that their governments could demonstrate progress in adopting fiscal overhauls.

The austerity debate could nonetheless produce friction at the summit meeting if, as expected, E.U. officials and Germany continue to emphasize regional financial consolidation, while the French, Italians and Spaniards continue to put far more emphasis on achieving economic growth.

President François Hollande of France is expected to lead the pro-growth faction, supported by the leaders of two big and struggling countries in Southern Europe: Mariano Rajoy of Spain and Mario Monti, who will represent Italy at the meeting despite having lost out in recent elections.

Article source: http://www.nytimes.com/2013/03/12/business/global/barroso-urges-eu-to-keep-cutting-debt.html?partner=rss&emc=rss

S.& P. Raises Greek Credit Rating to B- From ‘Selective Default’

The agency said the upgrade to B-, the highest grade it has given Greece since June 2011, reflected its view that the other 16 European Union countries using the euro are determined to keep Greece in the currency union.

It also gave Greece a stable outlook, meaning it is less likely to change its rating again soon.

“The stable outlook balances our view of euro zone member states’ determination to support Greece’s euro zone membership and the Greek government’s commitment to a fiscal and structural adjustment against the economic and political challenges of doing so,” the agency said in a statement.

Greece’s finance minister welcomed the upgrade. “It’s a decision that creates a mood of optimism, but we are well aware that we still face a long uphill course ahead,” the minister, Yannis Stournaras, said. “We are not relaxing in our efforts.”

An upgrade was expected since S. P. this month had temporarily lowered Greece’s rating to the bottom of its scale — “selective default” — because the country was buying back its own debt. The agency said that because the buyback had not forced any investors to sell their bonds back — which would have constituted a default — it was raising the rating back up.

The bond buyback was successfully completed last week, and will reduce the country’s debt by about $26 billion.

The size of the upgrade suggests European leaders are seeing results in bringing Greece’s debt load under control. But the credit rating is steadily losing relevance as there are few private investors still holding Greek bonds. Greece today owes most of its debt to euro zone states, the International Monetary Fund and the European Central Bank.

Article source: http://www.nytimes.com/2012/12/19/business/global/s-p-raises-greek-credit-rating-to-b-from-selective-default.html?partner=rss&emc=rss

Europe Survey Says Growth Outlook ‘Bleak’ for 2013

Europe’s job crisis, which has left more than 25 million people without work, has stirred rising public hostility to the European Union and has severely strained the social fabric in hardest-hit members like Greece and Spain, where unemployment has soared to over 25 percent.

“The economic and employment outlook is bleak and has worsened in recent months and is not expected to improve in 2013,” the European Commission, the union’s executive arm, said in a statement accompanying the release of its Annual Growth Survey, a yearly report on Europe’s economic outlook.

“The E.U. is currently the only major region in the world where unemployment is still rising,” the statement said.

Younger workers have suffered the most, with nearly one in three young people now jobless in six European Union countries and more than half of them unemployed in two others.

Tackling the crisis, however, has been complicated by wide differences in economic performance and interests among the union’s 27 member states. In Austria and Germany, for example, unemployment stands at 4.4 percent and 5.4 percent, a fraction of the rate in Spain and Greece.

Yet Greece’s economic meltdown, according to Standard Poor’s, is more severe in “duration and scale” than the German depression that paved the way for Hitler’s rise to power in the early 1930s.

“After several years of weak growth, the crisis is having severe social consequences,” the growth survey warned, noting that European welfare systems had “cushioned some of the effects at first but the impact is now being felt across the board.”

Greece, struggling to bring down its crippling debts, contain widening misery and curb the appeal of political extremism, has been hit in recent months by waves of strikes and street protests amid widespread anger at a program of austerity demanded by its international lenders in return for bailout funds.

Spain has also been hit by protests, as well as a surge of pro-independence sentiment in Catalonia and a bout of national soul-searching following reports of suicides by people facing eviction from their homes because of unpaid debts.

In an effort to combat a “crisis of confidence” in the European project, José Manuel Barroso, president of the European Commission, and other senior officials on Wednesday announced measures aimed at reviving stalled momentum toward closer economic, monetary and ultimately political union.

Though largely a reworking of previously announced steps, the plan, called a “blueprint for a deep and genuine economic and monetary union,” includes proposals to help countries like Spain overhaul their labor markets and make other reforms deemed necessary for economic recovery.

Article source: http://www.nytimes.com/2012/11/29/world/europe/europe-survey-says-growth-outlook-bleak-for-2013.html?partner=rss&emc=rss

Europe Steps Up Pressure on Greece

The ministers backed efforts by Greece to keep the interest rate on newly issued bonds below 4 percent, Jean-Claude Juncker, who represents the 17 nations using the euro currency, told a news conference. That is below the level offered by bondholders in exchange for their current holdings of Greek debt..

“The negotiations will have to be resumed on that point as we don’t have a final picture,” said Mr. Juncker, referring to the interest rate on Greek debt.

At stake is the need to pare Greek debt to levels where the country can conclude a bailout with the European Union and the I.M.F. that would give it the cash it needs to repay loans coming due in March and, officials hope, allow Athens to finance its needs through 2013. Without such a package, Greece could be faced with a chaotic default that would further destabilize the rest of the euro zone.

Efforts to address another aspect of the region’s debt crisis took a step forward late Monday, as ministers made progress toward establishing a permanent rescue fund, the European Stability Mechanism.

Olli Rehn, the European Union’s commissioner for economic and monetary affairs, said the ministers were able to complete most of the details of the permanent fund, which should be “in place and operational” by July after member states ratify the agreement.

Setting up a permanent fund and giving it adequate financial firepower is a priority for European leaders including Chancellor Angela Merkel of Germany and for officials like Christine Lagarde, the head of the I.M.F.

An obstacle to establishing the fund was cleared on Monday night when ministers found a way to ease concerns in Finland, one of the contributing nations, that it would not incur additional liabilities without prior consent.

Earlier Monday, Ms. Lagarde suggested that the 440 billion-euro European Financial Stability Facility, a temporary bailout fund established in 2010, could be rolled into the 500 billion-euro permanent fund.

The fund is expected to be less exposed to downgrades by ratings agencies than the existing European Financial Stability Facility.

“I am convinced that we must step up the fund’s lending capacity,” to help defend “innocent bystanders” elsewhere in the world who are hurt by the euro contagion, Ms. Lagarde said. “A global world needs global firewalls.”

Mrs. Merkel said that she wanted to see the new fund put into operation quickly. She also said Germany was willing to speed up its share of payments.

Despite continuing concerns about Greek debt, the euro strengthened to an almost three-week high against the dollar after the French finance minister, François Baroin, said in Paris that negotiations with Athens were making “tangible progress.”

Evangelos Venizelos, the Greek finance minister, said as he arrived in Brussels that Greece was ready to complete a private sector debt swap “on time.”

Private sector bondholders are seeking yields of nearly 4 percent, but Greece, as well as Germany and the I.M.F., argue that a yield closer to 3 percent is necessary to give the restructuring a serious hope of success. With the talks at an impasse, the pressure is now mounting on finance ministers to push for a solution.

Reinforcing the need for a deal, Mrs. Merkel said she wanted agreement “soon enough that no new bridge loan whatsoever will be needed” for Greece.

Even as ministers prodded financiers to do their part to ease the crisis in the euro zone, the I.M.F. pressed European governments to bolster the bailout funds available for euro zone countries so that the region’s problems could be contained.

Ms. Lagarde called on European leaders to complement the “fiscal compact” they agreed to last month with some form of financial risk-sharing. She mentioned bonds backed by debt securities issued by the euro zone or a debt-redemption fund as possible options.

While the sense of crisis has ebbed and markets have calmed since the European Central Bank last month announced longer-term refinancing operations to inject nearly 490 billion euros of liquidity into the banking system, analysts say the central bank has only bought time for leaders to put the 17-country currency bloc on firmer footing.

Without more such actions from governments and the central bank to reassure financial markets, Ms. Lagarde said, “countries like Italy and Spain, that are fundamentally able to repay their debts, could potentially be forced into a solvency crisis by abnormal financing costs.”

Ms. Lagarde also called for more fiscal integration among euro members, saying, “it is not tenable for 17 completely independent fiscal policies to sit alongside one monetary policy.” She called for new measures to increase the sharing of risk, including possibly jointly issued euro area debt instruments, or, as Germany has proposed, a debt redemption fund.

The monthly meeting of the ministers in Brussels came at a time of widespread gloom about the broad European economy. Austerity budgets in the euro zone are reducing demand and weighing on growth.

Even Germany, where factories are bustling, is feeling the effects. The Federal Statistical Office said last month that the German economy probably contracted by about 0.25 percent in the fourth quarter of 2011 from the previous three months.

The economy of Spain, which is struggling with an unemployment rate of more than 20 percent, may contract about 1.5 percent this year, the Bank of Spain estimated.

James Kanter reported from Brussels and David Jolly from Paris. Reporting was contributed by Melissa Eddy in Berlin and Landon Thomas Jr. in London.

Article source: http://www.nytimes.com/2012/01/24/business/global/lagarde-urges-europe-to-beef-up-bailout-funds.html?partner=rss&emc=rss

Key E.U. Members Resist Letting Some Liquids Onto Airplanes

PARIS — With just two weeks remaining before the European Union is due to partly lift a nearly five-year ban on liquids in air passenger hand luggage, several member states representing a significant share of the region’s air traffic have refused to comply with an April 29 deadline, making the change effectively meaningless for millions of travelers for at least several months, according to aviation industry officials.

On Thursday, Britain announced that it would defer easing the restrictions until October, citing a “continuing high threat” at its airports, which include Heathrow, the busiest hub in Europe. The move follows formal notifications in recent weeks by France and Italy that they would ignore the target date, which was set by the European Commission two years ago.

Under the new regime, it was expected that passengers transiting through an E.U. airport from a third country would be allowed to carry liquids, aerosols and gels purchased either at an airport duty-free shop or aboard a non-E.U. airline, provided they were sealed within tamperproof bags and screened before boarding by specialized scanners. But trade groups representing duty-free vendors in Europe and Asia said Friday that they were now urging their members to plan, for now, on maintaining the status quo on sales to Europe-bound passengers.

“It is clear that as things stand, many airports in Europe will not be able to lift the restrictions as scheduled,” the European Travel Retail Council, which represents more than 500 travel retailers, said. “We cannot afford our customers to have products confiscated that are bought in good faith.”

E.U. and industry officials said a handful of other countries, including Slovenia and Bulgaria, had also indicated they would not be complying with the change on April 29, while many other members of the 27-nation bloc had yet to declare their plans. So far, Germany, Denmark and Sweden have formally confirmed their readiness to ease the restrictions at the end of the month, said the officials, who asked not to be identified because of the political sensitivity of the situation.

The European Union, the United States and many other places first introduced the restrictions — which allow liquids only in amounts below 100 milliliters, or about 3 ounces — after the British authorities uncovered a plot in August 2006 to bomb U.S.-bound passenger planes using liquid explosives.

Responding to popular frustration with a policy that has forced passengers to jettison drink containers, toothpaste and even jars of marmalade before boarding planes, the E.U. transport commissioner, Siim Kallas, originally touted the phased-in easing as a way to harmonize and simplify airport security screening across Europe.

Aviation industry officials say they share Mr. Kallas’s goal of lifting the restrictions but have criticized the incremental approach as too unwieldy. Airport groups, meanwhile, have warned that current liquid-explosive detection technology is still too unreliable, potentially undermining passenger safety. Many have quietly urged Mr. Kallas to keep the full ban in place until 2013, when Brussels has vowed to eliminate all cabin restrictions on such goods.

One E.U. official involved in the discussions acknowledged that the split among member states “means that we don’t have as clear a position as had been initially envisioned.” But he confirmed the bloc’s commitment “absolutely to proceed with this small but important step toward a full lifting of the ban in 2013.”

Brian Simpson, a Socialist member of the European Parliament from Britain who heads its Transport and Tourism Committee, said he was disappointed that governments, including his own, were deferring what he described as an “essential step towards the removal of the entire ban in 2013.”

He argued that airports’ resistance to the plan was driven mainly by reluctance to invest in the new screening technology.

“This is not a question of security,” Mr. Simpson said.

Airport groups have not made a formal estimate of the number of transfer passengers who might be affected by the new regulation. But industry data show that as many as half of all transfer passengers at the region’s major hub airports are traveling to and from countries outside the European Union.

At Schiphol Amsterdam Airport, for example, 10 million passengers a year — more than 27,000 a day — are transiting from one non-E.U. country to another. At Air France’s main terminal at Charles de Gaulle Airport outside Paris, 10,000 passengers depart each day who began their journeys outside the European Union.

The commission plans to publish a leaflet on its Web site on April 29 that will aim to provide passengers with the latest information, an E.U. official said.

Airlines said they were worried that an inconsistency across European airports was likely to anger and frustrate travelers trying to make sense of the change.

“We are concerned this will cause disruption,” said Victoria Moores, a spokeswoman for the Association of European Airlines in Brussels. “It looks like there will be plenty of exceptions, which just makes a complicated situation much more complicated.”

Having grown accustomed to keeping liquids and gels out of their carry-ons, Ms. Moores said, “people just want to know what the new script is.” If it’s unclear, she said, “they’ll stick with what they’ve been doing to be on the safe side.”

Article source: http://feeds.nytimes.com/click.phdo?i=d0c17fdff124b35cf65ed47d8d9613c9