In this week’s newsletter, we focus on the following five topics: the European Prosecutor’s Office; the strength of the Euro; new rights for medical patients; more news about spying affairs; and the troubles of Europe’s financial system. Enjoy the reading and share with us your opinion about these topics!
About the fate of a European Prosecutor’s Office
Eleven Member States’ Parliaments – the UK, France, Ireland, the Netherlands, Denmark, Cyprus, the Czech Republic, Hungary, Malta, Romania and Slovenia – have addressed a “yellow card” to the European Commission about its proposal to establish a European Prosecutor’s Office. The Commission took notice of this reaction, but intends to pursue the project under the enhanced cooperation procedure. Indeed, the 17 other Member States have not expressed any opposition to the project and an enhanced cooperation requires only 9 Member States to be started.
In parallel, OLAF (the European anti-fraud office) would see its procedural guarantees reinforced and its governance strengthened. The competence for administrative investigations would be transferred to the European Prosecutor’s Office, but OLAF would still be responsible for other areas of investigation such as “irregularities affecting the EU’s financial interest” (Euractiv). These concomitant reforms would facilitate the prosecution of people involved in cross-border crimes, in particular financial ones.
Does a strong Euro damage growth prospects?
The Euro has strongly appreciated against the American dollar and the British pound in the recent days and weeks, reaching 1.38 USD and 0.85 GBP for 1 Euro. After months of fears spread by some economists and media about the Euro’s survival, not only the European single currency is still alive, but it has become again so strong that some politicians and businessmen claim it is penalising growth. This criticism was once more heard in France: while Pierre Moscovici, the minister for Economics, declared that we were not yet in a situation where the Euro is clearly overvalued, Arnaud Montebourg, minister for “Production Recovery” and regular critic of the Euro, claimed that an increase of 10% in the value of the single currency meant 150,000 fewer jobs in France. The European Commissioner for Industry, Antonio Tajani, also declared that the Euro was currently too strong for the competitiveness of European businesses. ECB officials admit that they have some troubles understanding the strength of the Euro, given the difficult economic situation across Europe. As inflation is still below the 2% target, the ECB may have to resort to new sorts of measures to stimulate the economy. Various explanations for the Euro’s strengths are envisaged: the divergence of monetary policy between the ECB and the Fed; the damages caused to the USD by the political squabbling in Washington; or the fragility of some emerging economies. Some of these causes may have only short-term effects and allow a rebalancing of the currencies in the medium term (e.g., once the Fed will start tapering its quantitative easing programme, the USD’s value should rise again). Moreover, some journalists and economists note that the Euro is only slightly above its intrinsic value and that the ECB should not end up flooding the market with liquidities like the Fed did.
A ‘healthcare Schengen’
The directive 2011/24/EU on patients’ rights in cross-border healthcare had to be implemented by all Member States by 25 October. This directive gives citizens the right to go to another Member State to get a medical treatment: EU patients benefiting from healthcare in another Member State will be equally treated as the nationals of that Member State. Moreover, the directive creates the right to be reimbursed for that treatment by their national health insurance system where the patient would be entitled to this treatment in his home State. Tony Borg, the European Commissioner for Health, declared this directive empowered patients as it gave them “greater choice of healthcare, more information [and] easier recognition of prescriptions across-borders”. Moreover, the directive aims at strengthening the cooperation between Member States on health matters, including “interoperable eHealth tools, the use of health technology assessment, and the pooling of rare expertise”. The fears about the cost of “health tourism” should however not be realised, as cross-border healthcare represents 1% of public spending on healthcare (this figure includes non-planned healthcare). For more information, look at the Q&A published by the Commission.
Spying affairs (again…)
New revelations about spying affairs continued to keep politicians, the media and the public opinion busy. Following the revelation that even Chancellor Merkel’s mobile phone had been a target of the NSA, a delegation of high-ranked German officials travelled to Washington to enquire about the issue. The US embassy in Berlin is suspected to play an important role in the American spying activities in Germany and several politicians have called for judicial consequences or the expulsion of guilty diplomats. Germans are so disappointed and annoyed that some German newspapers even talked about a turning point in the German-American relationship.
After Germany, Italy and Spain also strongly condemned US spying activities on their territories. Media in these countries talked about the tapping of tens of millions of private communication data. The Spanish government convoked the US ambassador in Madrid.
However, the reactions of national governments were mostly limited to angry words and do not entail retaliatory actions. MEPs voted last week to suggest suspending the SWIFT agreement and many called for a suspension of the current trade negotiations with the USA (which are due to restart soon, now that the American government’s shutdown is over). However, the European national leaders are unlikely to follow this path. They did not even agree on stricter data protection rules during last week’s European Council meeting. Chancellor Merkel sided with the UK in calling for negotiations “to be carried on intensively” instead of adopting new rules next year. This means that, because of the European elections next May, the project is likely to be postponed to 2015.
Besides the American spying, allegations emerged that Russia also tried to spy on G20 leaders by using gifts offered to the delegations: USB sticks and phone chargers. These aimed at collecting data from computers and mobile phones. It is the President of the European Council, surprised by such gifts, who asked after the G20 the German secret services to analyse the gifts.
The European financial system in danger?
According to the consultancy Ernst & Young, Eurozone banks would still have €940 billion of bad loans in their balance sheets. In total, 7.8% of all credits will not or not timely be paid back in 2013. This number is due to rising unemployment and to the low economic growth which have a negative effect on people’s income. There are huge differences between countries, as Spanish and Italian banks are the most affected by the phenomenon, while German banks are the most immune (only 3.2% of bad loans). There was more bad news: several banks face high costs due to penalties and legal settlements, e.g., linked to the Libor-rigging scandal.
However, despite the bad news, Ernst & Young predicts a 1% increase in banks’ income, which should reach a total amount of €605 billion. In 2014, the consultancy predicts some stabilisation, which could also allow more credits to flow to the real economy. In addition, central banks maintain a loose monetary policy in an attempt to spur credit to the real economy. Finally, the market value of banks has increased more than the broader market.
So, not all is bad about European banks, but major challenges remain ahead.
The Lithuanian Presidency of the Council has planned a high level conference on energy infrastructure on the topic “Completing the Internal Energy Market: Building an Integrated European Energy Network”. It will take place in Vilnius on Monday and Tuesday (4-5 November). Participants in another conference, to take place on 5 and 6 November in Vilnius, will debate about “The Agenda for growth in the EU: why migration matters”. Finally, a 3-day conference will take place on “ICT2013: Create, Connect, Grow” (Vilnius, 6-8 November).
The EP’s agenda for next week will be published here on Friday afternoon.