April 27, 2024

Merkel Urges Europe to Tighten Internet Safeguards

Ms. Merkel’s remarks, in a television interview on Sunday night, reflected the anger throughout much of Europe, including Germany, over recent accounts of government surveillance by the United States National Security Agency. Those accounts, in government documents leaked by Edward J. Snowden, a former N.S.A. contractor, included the agency’s compilation of logs of virtually all telephone calls in the United States and its collection of e-mails of foreigners from the major American Internet companies, including Google, Facebook, Yahoo, Microsoft, Apple and Skype.

Those companies have already begun aggressive lobbying campaigns to stop or dilute tighter privacy rules, which they say would interfere with their business models and decrease profits and growth. The companies’ efforts are, in turn, supported by countries like England and Ireland that fear that such restrictions would hamper economic recovery.

Unlike many citizens in the United States, whose desire to prevent the kind of widespread terrorist attacks like those of Sept. 11, 2001, often trumps their concerns about privacy rights and government surveillance, Germans have experienced the corruption of those rights under the Nazis and later the Communist government of East Germany, making them far more sensitive to the issue. Until now, though, Germany has been slow to back an aggressive privacy initiative across Europe partly because the country’s laws are among the tightest in the bloc.

Ms. Merkel said she now believed that only a broader pact could be effective. “That has to be part of such a data privacy agreement because we have great regulation for Germany, but if Facebook is registered in Ireland, then it falls under Irish jurisdiction,” she said. “Consequently we need a common European agreement.”

Human rights groups in Germany and Austria, which has similarly strict rules guarding private information, have taken on the Internet giants over Facebook’s default settings on sharing personal data and Google’s scooping up of private information while mapping out German cities for its Street View service.

“What actually happens with data when they leave Germany to servers outside of the country, or Europe, where they fall under the jurisdiction of completely different regulations?” Ms. Merkel asked in the interview on Sunday with the public broadcast network ARD.

She pointed out that existing international accords on privacy protection were drawn up decades before the digital era, and she said she would meet in the coming days with her interior and justice ministers to draw up proposed regulations on data privacy that could apply across the entire 28-nation bloc.

Companies contacted by e-mail, including Google and Microsoft, did not immediately respond to requests for comment about Ms. Merkel’s remarks.

“We’re still investigating what she said, and in what context she said it,” said Lisa Randles, a spokeswoman for BSA, an alliance of software companies, including Apple and Microsoft

The European Union’s justice commissioner, Viviane Reding, who originally proposed rules overhauling and updating the bloc’s privacy standards in early 2012, praised “this commitment of Chancellor Merkel to strong and uniform E.U. data protection rules” in a statement on Monday in Brussels.

The N.S.A. revelations have placed an added political strain on Ms. Merkel, who polls suggest remains in a strong position before German elections in September but who is under increasing attack from opposition parties trying to use the matter to undercut her popularity.

“The question is whether this is part of election campaign tactics or something with real substance,” Jan Philipp Albrecht, a German member of the European Parliament who is the main sponsor of the legislation, said in a telephone interview on Monday. The legislation needs the Parliament’s approval to take effect.

Melissa Eddy reported from Paris, and James Kanter from Brussels.

Article source: http://www.nytimes.com/2013/07/16/world/europe/merkel-urges-europe-to-tighten-internet-safeguards.html?partner=rss&emc=rss

DealBook: British Commission Says Bank Reforms Don’t Go Far Enough

George Osborne, Britain's chancellor of the Exchequer.Pool photo by Chris RatcliffeGeorge Osborne, Britain’s chancellor of the Exchequer.

LONDON — Regulators in Britain should have the power to completely split up banks, a government-commissioned report concluded Friday, adding that changes being currently proposed do not go far enough to prevent a future crisis.

Plans to tighten banking regulation, which are expected to go before Parliament early next year, “fall well short of what is required,” the report said.

After the rate-rigging scandal that erupted this summer, Britain’s chancellor of the Exchequer, George Osborne, asked a parliamentary commission to take a closer look at the planned banking regulation overhaul. While Mr. Osborne had previously backed the plan, the commission found the proposals lacking.

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“Banks need to be discouraged from gaming the rules,” the report said. “All history tells us they will do this unless incentivized not to.”

Now, Mr. Osborne has to decide whether to follow the recommendations of the Independent Commission on Banking and further strengthen the rules or bow to pressure from the banking sector, which argued that any strict rules would harm its competitiveness. Under the current proposals, banks would have to protect, or ring-fence, their retail banking operations from possible losses at their investment banking units.

But the commission said on Friday that the rate-manipulation investigation, which has ensnared more than a dozen big banks around the globe, highlighted the need for even stricter rules. “The latest revelations of collusion, corruption and market-rigging,” the commission wrote in the report, are “the clearest illustration yet that a great deal more needs to be done to restore standards in banking.”

The commission recommended “electrification” of such a ring-fence, meaning there needed to be periodic reviews that the partition remained in place and realistic threats to keep banks from trying to bend the rules.

“Over time, the ring-fence will be tested and challenged by the banks,” the commission said in the report. “Politicians too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence.”

Authorities in the United States and Europe are putting the finishing touches on a new set of banking regulations intended to avoid a repeat of the financial crisis that started in 2007.

In the United States, the Volcker Rule, a part of the Dodd-Frank act that would prohibit banks from making risky bets with their money, is nearing approval by regulators. In France, the finance minister, Pierre Moscovici, introduced a banking bill similar to one planned by Mr. Osborne.

But in some cases, the details remain murky. While latest recommendations by the British lawmakers might not fundamentally change the requirements for banks, they do add to the regulatory uncertainty for banks, which the industry contends makes it difficult to shape strategy.

“It’s suffocating,” Ian Gordon, an analyst at Investec, said. “There is constant speculation and change, and the number of resources banks have to make available is becoming more than a distraction.”

Anthony Browne, the chief executive of the British Bankers’ Association, an industry lobby group, warned that such uncertainty could threaten London’s position as a global financial center. “While it is clearly important to retain a degree of flexibility around the scope of the ring-fence, it is equally critical that any new system creates regulatory certainty for banks and their investors,” he said.

Article source: http://dealbook.nytimes.com/2012/12/21/after-rate-rigging-scandal-british-lawmakers-call-for-tougher-bank-rules/?partner=rss&emc=rss