Seven Days in Europe

Over 500 European banks rushed to borrow almost half a trillion euro in cheap loans from the ECB on Wednesday, highlighting the credit squeeze on the market and only marginally increasing investor confidence that the central bank is mastering the euro-crisis. 523 banks took a record of €489.2 billion at an interest rate of just one percent over three years – an emergency programme initiated by the European Central Bank.

Eurozone countries on Monday agreed to pay €150bn to a special IMF fund but failed to reach their total ceiling of 200bn among all EU states, as pledged at a summit on 9 December. Germany will be the largest contributor, with €41.5 billion, followed by France (€31.4bn), Spain (€14.8bn) and the Netherlands (€13.6bn). Euro-countries already under an EU-IMF bail-out – Greece, Ireland and Portugal – are not listed as contributors. IMF- supported EU countries outside the common currency – Hungary, Romania and Latvia – will also not be coughing up. Lithuania, still recovering from the financial crisis, and Bulgaria, the EU’s poorest member, are not participating, either.

Just a few days into the making of a new intergovernmental treaty on fiscal discipline, serious questions are being raised about whether the slight draft offered to date is either useful or necessary. Following the first day of negotiation on the proposed 14-article treaty, first circulated at the end of last week, the three MEPs at the table noted that virtually all the provisions could be done using the current EU treaties. “It is for political, symbolic reasons that they want to do this agreement,” said Guy Verhofstadt, Belgian liberal MEP, while his Socialist counterpart Italian MEP Roberto Gualtieri noted that “most, if not everything, could have been done through secondary legislation.”

Italy’s senate has passed a confidence vote on austerity measures planned by Prime Minister Mario Monti. The package includes spending cuts, tax rises and pension reforms. It had already passed in the lower house. Although all political parties had reservations about aspects of the programme, the measures were passed with a comfortable 257 to 41 majority. Spain‘s new prime minister, Mariano Rajoy, has pledged public spending cuts of at least €16.5bn (£13.8bn) today and said he would force the country’s banks to own up to the full scale of losses on bad property loans. Economists have warned that cuts would damage the prospects of an immediate return to growth in a country already burdened by massive unemployment, while ambitious reforms of the labour market and finance sector would take time to produce results.

The Turkish ambassador to France has been recalled in protest at a bill making it illegal to deny the mass killing of Armenians was genocide. The National Assembly in Paris voted by a show of hands to back the bill by a large majority, and it will go before the Senate next year. Turkey rejects the term “genocide” to describe the killing of Armenians under the Ottoman Empire.  Under the bill, those publicly denying genocide would face a year in jail and a fine of 45,000 euros (£29,000: $58,000).

A German court has jailed six men over a 300m euro fraud selling carbon emission permits through Deutsche Bank. Three Britons, two Germans and a Frenchman were given jail terms of between three years and seven years 10 months by a Frankfurt court. Under EU rules, limits are set on the amount of carbon dioxide companies emit, and those polluting less can sell ‘credits’ to those that need more. Judge Martin Bach said: “An important instrument of environmental policy has been hijacked to become an instrument of personal enrichment”.

The British government has blamed the euro for ratings agency worries on its triple-A status amid a widening political gap between Brussels and London. A UK treasury spokesman said that exposure to the eurozone is the main reason why Moody’s has warned that Britain’s top-level grade faces “formidable and rising challenges.” The spokesman said: “The UK is not immune to the problems facing our trading partners in the euro area; the crisis is having a chilling effect across Europe and it is important that the euro area continues to take decisive action to fix their problems.” Meanwhile, Alain Juppé, President Nicolas Sarkozy’s most senior cabinet figure, has insisted that there is “no strategy” behind a series of  belligerent comments from senior French officials over David Cameron’s veto of the new fiscal compact. In the past few days, President Nicolas Sarkozy has been quoted as describing David Cameron’s behaviour as that of a “stubborn child”, while his Finance Minister François Baroin said he would rather be French than British from an economic point of view. Christian Noyer, the head of France’s central bank said that Britain rather than France should lose its triple A credit rating, while Jean-Pierre Jouyet, head of France’s financial control body, said Britain had the “stupidest Right in the world”.

Václav Havel, the dissident playwright who led the Czechoslovakian “velvet revolution” and was one of the fathers of the east European pro-democracy movement that led to the fall of the Berlin wall, died on 18 December. Crowds gathered in Prague to pay their last respects, as his coffin was carried through the streets.

Russian president Dimitry Medvedev has called for the comprehensive reform of the country’s political system, trying to appease protesters who staged the biggest demonstrations since Vladimir Putin rose to power 12 years ago. “I propose a comprehensive reform of our political system. I want to say that I hear those who talk about the need for change. And understand them. We need to give all active citizens the legal chance to participate in political life,” Mr Medvedev said in the beginning of his last state of the nation address to both houses of parliament as president.

Finally, Norway is currently facing a severe butter shortage, driving people to resort to extremes to get their hands on it. Norwegians have eaten up the country’s entire stockpile of butter, partly as the result of a low-carb diet sweeping the Nordic nation which emphasizes a higher intake of fats. Norway’s butter woes also stem from a damp summer that reduced the quality of animal feed,  that in turn cut milk output by 25 million litres.  The soaring demand for butter used in traditional Norwegian Christmas dishes has also contributed to the shortage, leading the government to slash import duties on the cherished product this week. As a result of the shortage certain enterprising individuals have engaged in lucrative butter smuggling. Two Swedes have been arrested by Norwegian police for smuggling more than 250kg of butter into the country, offloading one consignment for more than £25 a packet.

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