The Newsletter n°636 — 1 sept. 2014
La Lettre
Corinne Deloy
—
1 September 2014
On 14th September, the Swedes will be electing the 349 members of the Riksdag (Parliament). After 8 years in office, a first in the kingdom for a rightwing government, the parties in the coalition (Moderate Assembly Party (M), the People's Party-Liberals (FpL), the Centre Party (C) and the Christian Democratic Party (KD), led by outgoing Prime Minister Fredrik Reinfeldt (M), are, according to the polls, due to return to the opposition benches and make way for a left alliance led by the Social Democrats and Stefan Löfven (SAP). The most recent poll by SIFO published mid-August forecasts the absolute majority to the three leftwing parties which together are due to win 176 seats against 141 for the four parties on the right. The Social Democratic Party is due to win 30.3% of the vote, the ecologists 11.1% and the Left Party 7.9% (i.e. 49.3% of the total); the Moderate Assembly Party is due to win 24.6% of the vote, the People's Party-Liberals (6.7%). The Centre Party (3.8%) and the Christian Democratic Party (3.4%) would be below the 4% of the vote. Together the rightwing is due to win 38.5% of the vote. Finally the Swedish Democrats are due to win 10.1% and 32 seats.
Elections
Referendum in Scotland on 18th September
1 September 2014
"Should Scotland be an independent country?", this is question that 4 million voters living in Scotland will have to answer, with either "yes" or "no" on 18th September (people born in Scotland but not registered on the electoral rolls are not allowed to vote whilst those born in England but living in Scotland will be able to vote). This affects around 500,000 Britons living in Scotland and 800,000 Scots living in England. Young people aged 16 to 18 are also allowed to vote in this referendum. Unlike the 1997 referendum, there is no minimum turnout threshold required for the validation of this election. If the "yes" wins, Scotland will become independent in 18 months time, i.e. on 24th March 2016. This date has not been chosen at random since it is the anniversary of the signature of the Acts of Union by Scotland and England which led to the formation of Great Britain in 1707 - it is also the date when James VI of the Scotland became the King of England and Ireland.
Financial Crisis
Further rise in unemployment in France
1 September 2014
The July unemployment figures in France, published on 27th August, indicate that the number of job seekers has risen by 27,400 across all of France (including its overseas territories). This is the second highest rise since February this year. The number of job seekers totals 3,689,500 individuals and has risen above the symbolic figure of 3.4 million in mainland France alone. If those who are employed part time are included in these figures the increase totals 43,500 - the worst figure since January. The number of people registered on the unemployment rolls now totals 5,386,600 people all categories alike.
The Germany economy withstanding the test
1 September 2014
In its monthly August report 2014 the Bundesbank warned that increasing geopolitical tensions are an increasingly heavy burden. However in its opinion a general downturn in the economy is not on the agenda. In the second quarter the GDP decreased by 0.2% in comparison with the first quarter which had been boosted by an exceptionally clement winter, as it rose sharply by 0.7%. The Bundesbank estimated the negative effect at 0.3% so that in the second quarter there will be minimal growth of 0.1% at least. Moreover the unemployment rate in Germany adjusted to seasonal variations remained stable in August at 6.7%, in spite of a surprise increase in the number of unemployed announced the Employment Agency on 28th August. The labour market of the EU's leading economy, has been stagnating since March in terms of the unemployment rate which is low in comparison with some of its European neighbours.
Economic sentiment negative in Europe
1 September 2014
On 28th August the European Commission published its economic sentiment indicator. It emerges that economic players are rather pessimistic about the future. Confidence has decreased by 1.5 points in the euro zone to 100.6 points and by 1.2 points to 104.6 points across the entire European Union. The index has therefore fallen to its December 2013 level. This downturn is stronger in the retail trade, industry and in the tertiary sectors. The index has fallen significantly in Italy (-4.1) but also in Germany (-1.9). This contraction is more moderate in France (-0.6), the Netherlands (-0.8) and has remained stable in Spain.
Recession in Italy
1 September 2014
According to figures published on 29th August by ISTAT, Italy fell back into recession in the second quarter with the GDP contracting by 0.2%. This is the second consecutive quarter of GDP contraction in Italy (after -0.1% in the first quarter).
New amended budget in Portugal
1 September 2014
On 26th August the Portuguese government announced that it had adopted a second amended budget for 2014 that should enable the country to respect its goals and bring its public deficit down to 4% of the GDP this year. The draft bill "will correct the effects of the decisions taken by the Constitutional Court," which rejected several austerity measures said the government after an extraordinary council of ministers. The new text does not include any tax increases but the executive maintains that the budget was benefiting from a "positive development in employment" which is generating a "reduction of unemployment benefit payments and a rise in fiscal revenues." The Portuguese Finance Ministry announced on 25th August that there would be a budgetary deficit of 5.82 billion euro between January and July, ie 389 million euro more than last year.
European Council
F.Mogherini, High Representative for External Affairs, D Tusk, President of the European Council
1 September 2014
The heads of State and government met in Brussels on 30th August 2014 for an extraordinary summit. They agreed on the appointment of Federica Mogherini, the present Italian Foreign Minister, to take over as head of European diplomacy in replacement of Catherine Ashton. This position also means that the title holder is Vice- President of the European Commission. The composition of the College of Commissioners has not yet been decided but Donald Tusk, the Prime Minister of Poland will replace Herman Van Rompuy as President of the European Council as of December 1st 2014 until 31st May 2017.
Conclusions of the Extraordinary European Council
1 September 2014
On the sidelines of the appointments of the main positions of the European Union the heads of State and government, who met in Brussels for an extraordinary European Council, discussed several points regarding ongoing international crises. The members of the Council condemned the situation in Ukraine and promoted Mr Poroshenko's peace plan - the latter was in Brussels where he notably met with Herman Van Rompuy. The heads of State re-iterated their concern about the situation in spite of the meeting with Vladimir Putin on 26th August. They are hoping for a rapid settlement to the conflict and support convoys of humanitarian aid according to international law. Depending on developments the Council has reserved the right to step up measures taken against Russia. The European Council also condemned the exactions undertaken by the Islamic State in Iraq and called for coordination between States in the region to counter the threat it poses. The heads of State expressed their satisfaction at the ceasefire established under the aegis of Egypt in Gaza. Regarding Libya the Council supports stepping up the embargo and has condemned foreign interference.
Commission
The EU releases 125 million euro for the fresh vegetable sector
1 September 2014
On 18th August the European Commission announced that it was releasing 125 million euro in support of the fresh vegetable sector that is suffering the year-old Russian embargo on western food products. "The idea is to reduce the quantities placed on the market so that prices do not fall to crisis level." Once made official the measures will apply retroactively as of 18th August and will remain in force until the end of November. Countries like Poland, Lithuania, Belgium and the Netherlands which are major vegetable and fruit suppliers to Russia, will be the main beneficiaries of this support. An exceptional Agriculture Ministers meeting is being planned for 5th September in Brussels to review the impact of the Russian embargo.
The EU opens its doors to Faroe Isle fish again
1 September 2014
On 18th August the EU decided to re-open herring and mackerel imports fished by the Faroe Isles again - a ban had been in place since August 2013 in protest against the "non-sustainable management" of herring stocks by the islands. This ban was lifted on 20th August in the wake of a political agreement between the EU and the Faroe Islands which was reached in June, thereby heralding the end of their dispute over the quota of herring that could be fished. The Faroe Islands have accepted "to stop non-sustainable fishing and to adopt a herring quota of 40,000 tonnes in 2014," which does not compromise work to protect stocks." The lifting of the European ban also included the re-opening of EU ports to the Faroe Islands' herring and mackerel fleets. This agreement effectively brings the diplomatic conflict between the Union and the islands to an end.
Emergency support to the dairy sector
1 September 2014
On Thursday 28th August the European Commission announced that it was going to provide aid for the private storage of milk, some cheeses and dried milk to limit the impact of restrictions set by Russia and the negative effects on the internal market. This aid, which will be in place for a 90 to 210 day period will provide compensation on set prices. The period of state intervention has been extended by the Commission on some products until the end of 2014. An implementation document will be presented over the next few days to the Regulatory Committee. These emergency measures were put forward for the peach and nectarine sector on 11th August to a total of 32.7 million euro and on 25th August regarding fruit and vegetables (125 million euro).
Rules to manage investor-State disputes
1 September 2014
On 28th August the European Commission announced that it had overcome a major hurdle towards the implementation of an overall investment policy with the publication of a regulation establishing a new set of rules to manage disputes in terms of investment agreements concluded with its trade partners. These rules - set out in the regulation relative to financial responsibility in the context of future investor-State disputes - represent a vital component of a common EU investment policy. They define who is best placed to defend the interests of the Member States and of the Union in the event of disputes that arise as part of the dispute settlement procedure between investors and States, in the context of Union trade agreements and the Energy Charter treaty. They also establish the distribution of possible costs and compensation. The Member States will defend all types of challenge to their own measures and the EU will defend the measures taken at EU level. In all events there will be close cooperation and transparency within the EU and its institutions.
Diplomacy
Permission to deliver arms to Kurd fighters
1 September 2014
The EU's 28 Foreign Ministers came to an agreement on 15th August to support the delivery of arms to Kurd fighters who are trying to counter the Jihadists of the Islamic State in Iraq. Apart from this issue the ministers also reviewed the crisis in Ukraine. They "urged" Russia to put an immediate "halt" to all types of hostility on the Ukrainian border whilst information revealed that Russian armoured vehicles had entered Ukraine.
ECB
Mario Draghi's speech at Jackson Hole
1 September 2014
Mario Draghi who met with the Presidents of the Central Banks of the world's main economies in Jackson Hole (USA), the President of the European Central Bank, said he was ready to do more to support activity in Europe if necessary. However he did not exonerate governments of taking structural measures indicating that the ECB, which is already giving as much support as possible to the European economy, was ready to do more if need be. This might be done notably by strengthening measures to stimulate loans, via the purchase of asset-backed securities (ABS). However the ECB's head clearly expressed what the responsibilities of the countries of Europe are. "No budgetary or monetary accommodation can compensate vital structural reforms in the euro zone," he stressed saying that "national structural measures" can no longer be delayed. This reform agenda covers the labour market, the products markets, as well as support action to the business environment," he said.
ECB Decisions
1 September 2014
On 7th August during an exchange with the press that followed the monthly governors' conference held by the European Central Bank (ECB), President Mario Draghi admitted that the crisis with Russia could weaken the European economy. "The geopolitical risk could affect economic conditions negatively," he declared. The "geopolitical risk" which implies the crisis with Russia and also Iraq, the near East, Syria and Libya as quoted by Mario Draghi, could lead to energy price increases and "weaken domestic demand". However Mr Draghi was cautious, stressing that "we are just at the beginning" and that "the possible impact" of the trade retaliations that Moscow has just launched is now being assessed. The ECB will monitor the consequences of the crisis with Russia very closely. This is occurring just as Mr Draghi noted a "slowing in the pace of growth" in Europe. "Recovery is slow, weak and unequal," he stressed.
Germany
German women badly paid
1 September 2014
In Germany wage inequality between men and women is greater than wages alone have led us to believe. Indeed if all incomes are taken into account women earn half of what men earn. If all income linked to work, capital and property is pooled together women in Germany earn 49% less than men on average explains the DIW institute in Berlin in a study published on 27th August. As a whole "women are employed more frequently in jobs that are less well paid than men," recalls Stefan Bach, the study's author.
Conference on the Balkans
1 September 2014
The conference on the Western Balkans took place in Berlin on 28th August with German Chancellor Angela Merkel and the President of the European Commission José Manuel Barroso in attendance. In his closing speech the latter recalled that the final goal is that the Western Balkan States should join the EU but that this depended in part on the speed with which reform was implemented. Recently Albania, Serbia and Kosovo have made significant progress. The conference did however highlight that regional cooperation was inadequate and that a number of obstacles remained which could not be settled by European funds and aid alone.
Angela Merkel in Ukraine
1 September 2014
The German Chancellor Angela Merkel repeated that "peace cannot be achieved alone" during a press conference with President Petro Poroshenko during her visit to Ukraine on 23rd August. In Kiev the Chancellor demanded that bilateral initiatives be taken in view of a peaceful settlement to the conflict in Ukraine. Germany will provide Ukraine with loans to a total of 500 million euro. This money will be used to promote reconstruction and to create a framework of guarantees for infrastructures in Ukraine. This should enable private investments in the network and electric installations in schools and also in water supply systems. 25 million euro are to be used to finance housing for those who cannot live in their region of origin. Funds will also be used provide aid to help treat the wounded.
CDU victory in Saxony
1 September 2014
The CDU, the party of German Chancellor, Angela Merkel won the regional elections that took place in Saxony on 31st August. The anti-Euro party, Alternative für Deutschland (AfD) will be making its debut in the Land's regional parliament. According to the first incomplete results that were broadcast by the TV channel ZDF the Christian Democrats (CDU) won 39.8% of the vote and the AfD 9.7%. Turnout totalled 49.2%.
Austria
New Finance Minister
1 September 2014
The Austrian Christian Democratic Party ÖVP approved the appointment of Hans Jörg Schelling as Finance Minister on 31st August following the surprise resignation on 26th August of Michael Spindelegger, who was also Vice-Chancellor and head of the ÖVP. Economy Minister Reinhold Mitterlehner has taken over from Michael Spindelegger as head of the party thereby becoming the government's number two in the coalition between conservatives and social democrats (SPÖ), which was elected in December 2013.
France
Ministerial reshuffle in France
1 September 2014
French Prime Minister Manuel Valls was re-appointed to office following the resignation of his government on 25th August. The Valls II government is of equal composition since there are 8 men and 8 women ministers. Najat Vallaud-Belkacem has now become Education Minister, Fleur Pellerin, Culture and Communication Minister, Emmanuel Macron, Economy, Industry and Digital Industry Minister, Patrick Kanner, Minister for Towns, Youth and Sport. Thomas Thevenoud has been appointed Secretary of State for External Trade, Alain Vidalies, Secretary of State for Transport, Pascale Boistard, Secretary of State for Women's Rights, Myriam El Khomry, Secretary of State for Urban Policy. The new team should be "in line with the guidelines" defined by the Prime Minister and according to the wishes of the head of State.
Italy
Support to Italy to manage refugee flows
1 September 2014
On 27th August Italy's Foreign Minister Angelino Alfano won the support of the Internal Affairs Commissioner, Cecilia Malmström, so that the European agency Frontex can gradually take over from the Italian military in terms of managing the flows of refugees who are trying to reach Europe via Italy. "We are going to study all requirements and launch an appeal for participation on the part of Member States in order to set up a Frontex operation as of November," promised Cecilia Malmström. "The time for sympathetic declarations is over, the States must now show their solidarity," she added. After the Lampedusa drama in October 2013 the Italian army launched a temporary operation called "Mare Nostrum" to prevent more shipwrecks in the Mediterranean. This was achieved to a certain degree since the Italian navy has picked up more than 100,00 illegal immigrants since the beginning of the year, who were mainly Eritreans and Syrians. However there have been many disasters. The UN's High Commissioner for Refugees has spoken of a total 2000 deaths since January.
Romania
Gas pipeline with Moldova
1 September 2014
Romanian Prime Minister Victor Ponta and his Moldovan counterpart Iurie Leanca inaugurated the gas pipeline that will enable Moldova to reduce its dependency regarding Russian gas. "Thanks to this pipeline Moldova will no longer have to fear energy deprivation," inflicted by the Russian giant Gazprom, its only gas supplier until now, declared Mr Ponta during a ceremony with the European Commissioner for Energy Günther Oettinger in attendance.
UK
Immigration up in the UK
1 September 2014
In 2014 the UK registered an increase in immigration of 243,000 people ie a net increase of 39% over one year, according to official statistics published on 28th August, whilst the government wants to bring the figure under 100,000 by 2015. The migratory balance in the UK - the difference between entries and exits - recorded a significant rise of 68,000 people over one year up from 175,000 to 243,000 declared the ONS in its report.
Turkey
New Turkish President and Government
1 September 2014
The new Turkish President Recep Tayyip Erdogan was sworn in on 28th August before Parliament in Ankara during a ceremony that was ostensibly boycotted by the MPs of the main opposition party. Head of government since 2003, Recep Tayyip Erdogan was elected to the supreme office on 8th August winning 52% of the vote in the first round - which was organised by direct universal suffrage for the very first time. 60 year-old Erdogan who takes over from Abdullah Gül has promised to adhere to the "Constitution, rule of law, democracy, the principles and reforms introduced by Atatürk and to the principles of the secular Republic." On 27th August the Turkish president gave the party in office's lead to Ahmet Davutoglu, with the latter promising to continue Erdogan's policy. Mr Davutoglu, Prime Minister formed a government which "continues the work started by his predecessors."
Ukraine
Dissolution of parliament, elections in Ukraine on 26th October
1 September 2014
Ukrainian President Petro Poroshenko dissolved Parliament on 25th August 2014 and convened general elections for 26th October. "I decided to bring Parliament's powers to an end early," announced the President. "The new Parliament will be elected on 26th October," he indicated. The president's decision to dissolve parliament, the Verkhovna Rada, was expected by many after the collapse of the government coalition in Parliament in July and after Mr Poroshenko's commitment to convene general elections in the autumn and not in 2017 as planned previously.
Situation tense in the east of Ukraine
1 September 2014
The Europeans, the USA, the UN and NATO have unanimously condemned the presence of Russian tanks in the east of Ukraine. However Russian President Vladimir Putin travelled to Minsk, Belarus on 26th August for a regional summit which Ukrainian President Petro Poroshenko and Catherine Ashton, the EU's High Representative also attended. Discussions did not lead to a satisfactory conclusion and the situation has worsened on the ground with the presence of Russian tanks in the east of Ukraine on 28th August. President Poroshenko even declared that the "Russian military invasion had started." The latter cancelled his planned trip to Turkey because of the "rapid downturn in the situation", and asked the EU and the US to freeze Russian assets and all major military aid given the entry of Russian troops into the separatist east. This has led to fears of an open war between Russia and Ukraine. On Lithuania's request the UN Security Council convened an emergency meeting.
Council of Europe
Doubts about the independence of the legal system
1 September 2014
The Group of States against corruption (GRECO), which is part of the Council of Europe, published an evaluation report on 28th August which addresses the prevention of Belgian MPs' corruption and also that of judges and members of public office. In particular the document notes the lack of any periodic report on the functioning of the legal system "in a country that is typified by major disparities between its regions and between courts and tribunals." It invites the High Council of Justice to use its power of inquiry and audit more extensively. GRECO also observes a major deficit in terms of people who are called to be judges and recommends that they "be subject to appropriate safeguards and rules as regards their independence, impartiality, integrity (professional conduct, conflicts of interest, gifts, etc.), supervision and the applicable sanctions." GRECO concluded by inviting Belgium to fall in line with its recommendations before 30th September 2015.
IMF
New tranche of IMF aid to Ukraine
1 September 2014
On 29th August the IMF announced that it had concluded the revision of the initial work undertaken by Ukraine regarding the economic programme. This revision has enabled the provision of 1.39 billion dollars which will total 4.51 billion as part of the agreement. Generally the economic policy measures recommended have been implemented and the Ukrainian authorities have continued to take difficult measures in spite of an uncertain political climate. However the conflict in the east of Ukraine is weighing heavily on the economy and society as a whole and additional measures will be necessary to achieve goals over the next few months.
Eurostat
16.8 billion euro surplus in the euro zone's international goods trade account
1 September 2014
According to Eurostat data published on 18th August the first estimates for the month of June 2014 show that the euro zone recorded a surplus of 16.8 billion euro in its international goods trade account with the rest of the world in comparison with 15.7 billion in June 2013. The balance recorded in May 2014 lay at 15.4 billion euro against 14.6 billion in May 2013. In June 2014, in comparison with May 2014, exports adjusted to seasonal variations decreased by 0.5%, whilst imports increased by 0.5%. Regarding Member States' overall trade figures Germany (+84 billion euro January-May 2014) had the highest surplus, followed by the Netherlands (+25.2 billion), Ireland and Italy (14.1 billion each). The UK (-48.1 billion) had the highest deficit, followed by France (-30.4 billion), Spain (-10.1 billion) and Greece (-8.8 billion).
Annual inflation rate down
1 September 2014
Euro area annual inflation is expected to be 0.3% in August 2014, down from 0.4% in July, according to a flash estimate by Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, services is expected to have the highest annual rate in August (1.2%, compared with 1.3% in July), followed by non-energy industrial goods (0.3%, compared with 0.0% in July), food, alcohol & tobacco (-0.3%, stable compared with July) and energy (-2.0%, compared with -1.0% in July).
GDP stable in the euro zone and slightly up in the EU
1 September 2014
According to Eurostat estimates published on 14th August for the second quarter of 2014 the euro zone's GDP remained stable and that of the EU was up by 0.2%. This implies a rise of +0.7% and +1.2% respectively in comparison with the second quarter of 2013. As a comparison over the second quarter of 2014 the USA's GDP increased by 1% in comparison with the previous quarter (after -0.5% in the first quarter of 2014). In terms of the same quarter the previous year the GDP increased by 2.4% (after +1.9% in the first quarter of 2014).
10.2% unemployment rate in the Union
1 September 2014
According to data published by Eurostat on 29th August unemployment in the euro zone, adjusted to seasonal variations lay at 11.5% in July 2014 - which was stable compared to June 2014, but down in comparison with the 11.9% recorded in July 2013. Concerning the EU unemployment lay at 10.2% in July 2014, also stable in comparison with June 2014 but down in comparison with the 10.9% of July 2013. Eurostat believes that in July 2014 24.850 million men and women were out of work in the EU of whom 18.409 million were in the euro zone. In comparison with June 2014 the number of unemployed dropped in the EU by 41,000 and has remained almost stable in the euro zone. In comparison with July 2013 unemployment has dropped by 1.634 million people in the EU and by 725,000 in the euro zone. Amongst the Member States the lowest unemployment figures were to be seen in Germany and Austria (4.9% each) and the highest in Greece (27.2% in May 2014) and in Spain (24.5%). Over one year the unemployment rate declined in 22 Member States, increased in three and remained stable in three others.
Culture
71st Mostra Venice
1 September 2014
The International Cinema Mostra in Venice opened its doors on 26th August and will run until 6th September. Created in 1932 the Mostra is the oldest cinema festival in the world. The event is part of the wider Venice Biennale, a cultural modern art festival of which it forms the cinema section. Of the fifty full length feature films that will be shown until 6th September, 20 are competing for the Golden Lion that will be awarded by a jury led by French film music composer Alexandre Desplat, the first chair who is not a director or an actor, since the launch of the Mostra in 1932.
"Visa pour l'image"
1 September 2014
The biggest international photo-journalism festival which takes place every year in Perpignan is running until 14th September. This is an exceptional venue for those passionate about photography as it rallies thousands of visitors. The exhibitions which are spread around the town can be explored freely - visitors can see the reports made by photo-journalists from the world over. There are open air film screenings in the splended medieval location of the Campo Santo cloister. There are also seminars and meetings - agency stands and major photographic technology brands are also present.
Agenda
les 1st-4th September
European Parliament, return to Parliament, Commissions' Week (Brussels)
4th September
Council of Governors of the European Central Bank (ECB) (Frankfurt)
4th and 5th September
NATO Summit (Wales)
5th September
Agriculture and Fisheries Council (Brussels)
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General elections 26 October in Georgia: a referendum on Europe
The Editors of the Newsletter :
Stefanie Buzmaniuk, Helen Levy
N°ISSN : 2729-6482
Editor-in-Chief :
Eric Maurice
Director of Publication :
Pascale Joannin
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