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German Official Backs Tax Vetoed by Britain

December 13, 2011 by Leave a Comment

“A financial transaction tax would be positive,” said the foreign minister, Guido Westerwelle, emphasizing that if there were such a tax, “we would have to include all the European Union” and not just those members that use the euro.

His remarks were implicitly directed at Prime Minister David Cameron of Britain, who irritated his European Union colleagues at the summit meeting by vetoing proposed treaty changes in part because he felt they lacked safeguards for the future of the City, London’s financial district and a vital economic engine for Britain. Mr. Cameron’s actions left Britain isolated, and Mr. Westerwelle’s remarks suggested that the veto still would not insulate London from changes undertaken by other European Union members.

In an interview with the editorial board of The New York Times, Mr. Westerwelle also said the door was still open for Britain to join the new economic stability pact that Germany and all other European Union members are going ahead with regardless of Britain’s decision. “It is a standing invitation for Great Britain,” he said.

The idea of a financial transactions tax, a tiny levy that would be collected on trades of stocks, bonds and other types of securities and then used to help the economically disadvantaged, has attracted enormous interest in Europe. Nicknamed the Robin Hood tax, the proposal has been heralded as a novel approach for redistributing at least a small portion of the profits amassed by wealthy investors, a disparity that helped to energize the Occupy Wall Street movement. The proposed tax has an array of influential advocates, including the leaders of France and Germany, as well as philanthropists like George Soros and Bill Gates.

Mr. Westerwelle forcefully defended the outcome of the summit meeting in Brussels, which embraced Germany’s recipe of austerity and discipline for combating the economic crisis afflicting the euro zone’s troubled members — a crisis that has called into question the viability of the euro itself. Under the agreement, the euro zone’s 17 member governments will accept more oversight and control of national budgets, at the expense of their own sovereignty.

“From the German perspective, this is a debt crisis, not a growth crisis,” he said.

Asked about Western concerns that Iran may be close to building a nuclear weapon, despite Iranian denials, Mr. Westerwelle reiterated Germany’s position that a nuclear-armed Iran would be unacceptable. He also described the report issued last month by the International Atomic Energy Agency on Iran’s possible work on a weapon as “alarming.”

But he said it was premature to discuss new sanctions on Iran that would prohibit dealings with Iran’s central bank, saying that “sanctions only work well if many countries participate.”

He declined to discuss legislation approved by the United States Senate this month that would penalize foreign banks that engage in transactions with the Iran central bank by denying them access to the American market.

Article source: http://www.nytimes.com/2011/12/13/world/europe/guido-westerwelle-german-official-backs-tax-vetoed-by-britain.html?partner=rss&emc=rss

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British Premier, Cameron, Defends Veto on Europe Treaty

December 13, 2011 by Leave a Comment

As members of the Labour opposition shouted “Where’s Clegg?” — a reference to Deputy Prime Minister Nick Clegg, a Liberal Democrat, who, angry about the veto, was conspicuously absent from Parliament — Mr. Cameron, a Conservative, seemed at pains to offer soothing words to those afraid that he had so alienated his European allies that Britain was bound to leave the European Union altogether.

“Britain remains a full member of the E.U., and the events of the last week do nothing to change that,” Mr. Cameron said. “Our membership of the E.U. is vital to our national interest. We are a trading nation, and we need the single market for trade, investment and jobs.”

After vitriol poured out at Mr. Cameron over the weekend — from the Labour Party, from prominent Liberal Democrats in the coalition government, from European diplomats — Monday’s session was oddly anticlimactic. Buoyed by the compliments of anti-European backbenchers in the Conservative Party, who said they would have vetoed the treaty themselves if Mr. Cameron had signed it, the prime minister appeared relaxed and self-assured, exuding the easy confidence that is one of his strongest political assets.

He told Parliament, as he has said all along, that he exercised Britain’s veto because the proposed treaty changes, meant to avert future European economic disaster by strengthening fiscal discipline, gave no assurances to safeguard the future of London’s financial services industry, a critical part of the British economy.

“The choice was a treaty with the proper safeguards or no treaty,” he said. “The result was no treaty.”

Mr. Cameron’s veto left Britain standing alone in Europe. All the other 26 European Union countries either agreed to the proposals, which will be negotiated according to intergovernmental agreements, or said they would seek the approval of their parliaments back home.

Ed Miliband, leader of the Labour opposition, said Mr. Cameron had isolated Britain, a dangerous move at a time when European cooperation was essential. He also questioned Mr. Cameron’s purpose, given that the treaty changes seemed likely to go ahead anyway.

“It’s not a veto when the thing you wanted to stop goes ahead without you,” Mr. Miliband said, to shouts of approval from his fellow party members. “That’s called losing. That’s called being defeated. That’s called letting Britain down.”

Olli Rehn, the European commissioner for economic and monetary affairs, said Britain could hardly wall off its financial industry, the bustling City of London. “I regret very much that the United Kingdom was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives,” Mr. Rehn said. “We want a strong and constructive Britain in Europe, and we want Britain to be at the center of Europe, and not on the sidelines. If this move was intended to prevent bankers and financial corporations in the City from being regulated, that is not going to happen.”

Mr. Rehn also offered a reminder that Britain had approved “the six-pack of new rules tightening fiscal and economic surveillance” that goes into force on Tuesday. “The U.K.’s excessive deficit and debt will be the subject of surveillance like other member states,” he said, “even if the enforcement mechanism mostly applies to the euro area member states.”

There had been some worry that Mr. Cameron would face trouble from his own anti-European Union party members, including many who called over the weekend for the government to seize the opportunity to claw back powers from Brussels. But all was conviviality on Monday, with even the most hard-line Conservatives praising the prime minister. Although Mr. Cameron faced a few gentle questions about whether to hold a national referendum on Britain’s membership in the European Union, something the anti-Europe faction dearly wants, he batted them briskly away.

And the Liberal Democrats — at least those other than the missing Mr. Clegg — pulled back from their tough language over the weekend, mildly attacking Mr. Cameron while giving assurances that the important thing was to ensure a good relationship with Europe and to keep the coalition government together.

Reporting was contributed by Alan Cowell from London, Rick Gladstone from New York, Steven Erlanger from Paris, Nicholas Kulish from Berlin, and Stephen Castle from Brussels.

Article source: http://feeds.nytimes.com/click.phdo?i=d74557484a0e40cdd6ef3c19951c4fc3

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Merkel Urges Treaty Changes to Fix Euro Crisis

December 3, 2011 by Leave a Comment

Mrs. Merkel, a central player in efforts to rescue Europe’s single currency, was addressing the German Parliament before a meeting next week in Brussels, when Europe’s leaders will try again to find a politically palatable solution to the crisis. Threats of a credit squeeze and default by deeply indebted countries have roiled global markets and brought down governments, most notably in Greece and Italy.

While Mrs. Merkel called for quick changes, “if possible by the end of the year,” historically there has been nothing speedy about the remedy she proposed: fixing the “mistakes of construction” in the euro zone by altering the treaties that govern the European Union. It took years to negotiate and ratify the last major change, the Lisbon Treaty, after the failure of the previous effort to write a European constitution.

But Europe’s leaders are evidently hoping to use the shadow of impending crisis to speed the process. Mrs. Merkel’s call for a new treaty tracked with a speech made Thursday by President Nicolas Sarkozy of France, with whom Mrs. Merkel has been negotiating. Some experts say there are more expeditious ways to effect treaty changes than the traditional path followed by the Lisbon Treaty.

Mrs. Merkel’s assessment of what was needed appeared to be well received by European financial markets, which had been strengthening this week anyway, partly on hopes that European leaders would address the crisis. The Stoxx 600 index, a broad barometer, rose 1.2 percent for the day and 9 percent for the week, its biggest gain in three years, Bloomberg News reported. The euro was trading at $1.348, up from $1.346 on Thursday.

Mrs. Merkel continued to oppose so-called euro bonds backed by all 17 members of the existing currency union, which embraces many different levels of economic strength ranging from struggling Greece to the export-driven German economy, which is seen as the powerhouse of Europe. She called the idea of euro bonds “unthinkable.”

Her comments with regard to the European Central Bank were more ambiguous. She defended the independence of the bank and said she would not comment on its decisions. A report on Friday in the newspaper Süddeutsche Zeitung said she was prepared to tolerate more aggressive action by the bank to steady the most indebted nations.

Some financial experts have also speculated that Mrs. Merkel and Mr. Sarkozy are trying to create the impression of irresistible momentum toward structural change in Europe as political cover for the central bank. If the public and the bank believe that steps are being taken to rein in irresponsible governments, the experts say, then the bank’s German-influenced leadership is more likely to act decisively.

The president of Germany’s powerful central bank, Jens Weidmann, said Friday that the long-term solution to the euro crisis was the responsibility of governments, rather than of the central banks. Countries must be willing to cede some control over their spending policies, he said, for example by agreeing to automatic tax increases if their budget deficits rise above limits agreed to by treaty.

If political leaders announce a credible plan this coming week, he said, “calm could quickly return to markets.”

The urgency of the crisis, which has forced Greece, Portugal and Ireland to take bailouts and has driven up borrowing costs for Italy to unsustainable levels, is apparent in the flurry of meetings between European leaders. On Friday, Mrs. Merkel sat down with Chancellor Werner Faymann of Austria, and Mr. Sarkozy and Prime Minister David Cameron of Britain held talks in Paris.

Mr. Sarkozy tried to reassure Mr. Cameron about French and German plans to promote a new European Union treaty to enforce budget discipline. Britain, which is part of the European Union but not the euro zone, is worried about the creation of a “two-speed Europe” if the euro zone countries make agreements just among themselves.

While France and Germany see closer European oversight of national budgets as the key to calming the storm on the bond markets, Mr. Cameron is under pressure from his Conservative supporters at home to protect British interests and sovereignty. “We’ll see what happens next Friday, but I’m absolutely convinced the bottom line for me is always what is in the best interests of the U.K. and how I can promote and defend that,” he said, referring to the summit meeting next week.

Nicholas Kulish reported from Berlin, and Steven Erlanger from Paris. Alan Cowell contributed reporting from London, and Jack Ewing from Frankfurt.

Article source: http://feeds.nytimes.com/click.phdo?i=355239a00b797809ba331ba4865e8afc

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