France calls extraordinary EU summit on crisis

EU leaders will meet in Brussels on 7 November to hammer out a common EU contribution to the G20 summit scheduled a week later in Washington to address the financial crisis and its effects on the world economy.

French President and EU presidency holder Nicolas Sarkozy called the extraordinary meeting after announcing his intention to launch a debate on “the refoundation of capitalism” following the collapse of major banks in the US and Europe (EURACTIV 22/10/08).

Investors are hoping the G20 will fix the global financial system as the economy moves into a recession, hitting small businesses most severely (EURACTIV 15/10/08).

But while many EU leaders are showing signs of supporting increased financial regulation and supervision, it remains unclear how far Europe wants to go. Some capitals oppose the introduction of new rules to regulate sectors such as hedge funds, private equity and derivatives, and others simply oppose the principle of common supervision of financial groups (EURACTIV 17/10/08).

Sarkozy also suggested closing tax havens both outside and within Europe and creating European sovereign wealth funds to protect national champions from foreign takeovers. 

However, as yet there is no genuine European backing for these suggestions.

The EU summit will also seek to address Spanish sensitivities ahead of the G20. Only the UK, France, Italy and Germany will represent the European Union in Washington, alongside major world powers and emerging economies such as Brazil, China, India, Russia, Mexico, Saudi Arabia and Turkey. The twentieth member will be the EU, represented by the French Presidency.

But Madrid is complaining loudly about its exclusion from the G20 and is waging an all-out diplomatic offensive to be invited in Washington. Other EU countries such as Poland are also said to regret not being invited.

Indeed, the four EU representatives at the G20 will desperately need a mandate from the 27-member bloc if they are to be taken seriously by the US administration in their proposal to review the post-WWII economic order, the ambitious reform of which UK Prime Minster Gordon Brown and Sarkozy have jointly called for (EURACTIV 15/10/08).

“We will speak with a unified European voice on the financial crisis,” French President Nicolas Sarkozy told journalists after a recent EU summit in October.

Further divisions could emerge during separate meetings of EU finance ministers and of the Eurogroup on 4 November. Sarkozy wants to create a “real economic government” of the euro area and volunteered to take the helm of the eurozone until 2010. But the incoming Czech Republic, which takes over the EU presidency from France on 1 January, has already opposed this idea, saying that “nobody can take the presidency away from the Czech Republic” (EURACTIV 24/10/08).

Read more with Euractiv

EU panel on banking supervision raises concerns

Despite the ongoing financial crisis, the European Commission seems to be delaying addressing current shortcomings in banking supervision, considered a key factor in the onset of the crisis. Instead, it has appointed a team of experts to present suggestions on the issue by next spring, sparking criticism and raising concern regarding some of the members chosen for the new panel.