Europe

S&P to downgrade France and Austria

The word is that France will be downgraded by Standard and Poor’s tonight. AFP is reporting that French officials expect France to drop to a AA+ rating, losing its treasured AAA status and increasing how much it will have to pay to borrow money. 2012 has, so far, been relatively quiet on the euro front. But expect the issue to return to centre stage over the coming weeks. There are the downgrades coming tonight – France is apparently not the only eurozone country that S&P will mark down with Austria set to lose its AAA rating too – and a coercive and chaotic Greek default seems increasingly likely.

Would Spain stop Scotland from joining the EU?

Alex Salmond’s case for independence relies on Scotland joining the European Union. If an independent Scotland was a member of the EU, then Scotland would be part of the single market and free movement of labour across the border could continue (an independent Scotland would also have to join the euro, but that’s something Salmond is less keen to talk about). But, as one Whitehall source points out to me, it is far from certain that Scotland would be able to join the EU.   The Spanish are currently blocking Kosovo’s accession to the EU. Why? Because the Spanish, who don’t even recognise Kosovo as a state, fear the implications of a region becoming independent and then joining the EU. They worry that it would encourage Basque separatism.

A taxing kind of spin

The story being briefed out of the year’s first Franco-German Summit is that President Nicolas Sarkozy won the backing of Chancellor Angela Merkel for a tax on financial transactions, a levy that the British government objects to and that Ernst and Young say would leave a €116bn hole in Europe’s public finances. But before the City begins building barricades and the PM puts on his bulldog mask, it is worth taking another look at the news from Berlin. For no sooner had the agreement been announced than the tax was rejected by Chancellor Merkel's junior coalition partner, the pro-business Free Democrats, who say they will only back a Europe-wide tax scheme. They are not alone. The Netherlands and Ireland feel the same.

Dave talks film, finances and Europe

It was the second of the Today Programme's New Year's interviews with the three party leaders today; this one with David Cameron. And there was plenty to digest from it. So much, in fact, that we thought we'd bash out a transcript, so that CoffeeHousers can read it through for themselves. That's below, but before we get there it's worth highlighting a couple of things that Cameron says. First, his point that ‘we've seen a level of reward at the top that just hasn’t been commensurate with success’, which is another volley in the battle against the ‘undeserving rich’ that James mentioned yesterday.

Happy New Year from world leaders

It’s the New Year — a time when politicians all over the globe get on their soapboxes and preach to their people. From Merkel’s pledge to do everything for the euro, to North Korea’s vow to defend their new leader unto death, to Putin’s speech laden with sexual innuendo, here’s a selection of this year's messages from world leaders: Barack Obama: ‘I promise to do everything I can to make America a place where hard work and responsibility are rewarded, one where everyone has a fair shot and everyone does their fair share. That's the America I believe in.’ Angela Merkel: ‘Today, you can trust that I will do everything to strengthen the euro. This will only succeed if Europe learns from the mistakes of the past.

European integration that we can get behind

Part of the magic of the New Year's Day concert from the Vienna Philharmonic is knowing that millions are watching the same event live, right throughout Europe. It's perhaps the only cultural event that unites the continent in this way (other than Eurovision). Politically and economically, not very much binds us together, as the tensions within the European Union demonstrate. The continent is a model of diversity, which is why homogenisation attempts fail. But when it comes to culture, it's a different story altogether — with classical music being, perhaps, one of the strongest unifying factors. Turn up to a concert hall in Edinburgh, Leeds or Athens to listen to classical music, and the odds are it'll be from a relatively small number of central European composers.

How democracy fared in 2011

Even before we were a month in, 2011 was an historic year. Principally because in a region of the world where governments shift through military coup or foreign intervention, dictators fell — and others tottered — thanks to local popular uprisings. Whatever the outcome of those events (and I have expressed my fears elsewhere, here) they remain a landmark worth observing. Whether or not the coming years are any good at all for them, 2011 was a great year for democrats in the Middle East. In the older democracies of the West, however, 2011 was more disconcerting.   If anyone doubts this, consider the following experiment. It is the beginning of any year other than this one over the last two decades.

What didn’t happen in 2011

In the run-up to every New Year, newspapers and the blogosphere are full of articles about what happened in the year just gone. 2011 was a particularly eventful year so there will be much to pick from. But what about the things that did not happen, though they were widely expected? Here are five things that did not take place — though, as the year unfolded, many people would have bet on their occurrence: 1) Algeria's revolution. As one North African dictator after another fell to pro-democracy protesters, everyone expected Algeria to be next. But it wasn't.

Who is the British foreign secretary?

Officially, of course, the answer to that question is William Hague - who has put in some decent work since assuming office, particularly during the Arab Spring. But, still, I ask it because, following the European Council, Nick Clegg seems to have usurped the Foreign Secretary's role in a number of key areas. It was the Deputy Prime Minister who engaged the newly-elected Spanish leader, for example. It was also Clegg, not Hague, who was instrumental in bringing German foreign minister Guido Westerwelle to Britain on a 'we still love you' visit yesterday. And when it comes to phoning European leaders to press a UK position, it is the Deputy Prime Minister who is asked to put in the hours, not the veto-wielding Prime Minister or Britain's chief diplomat.

The latest act in Europe’s comic opera

If it was not all so serious, the efforts to save the single currency would be worthy of a comic opera: the Germans could compose the score, the Italians could write the libretto, and the French could take care of the stage directions. The latest IMF-related effort is, perhaps, best described by the website ZeroHedge, which is required reading during these troubled times: “Germany will be responsible for €41.5 bn, France at €31.4 billion, and Italy will need to provide €23.5 billion and Spain another €15 billion.

Clegg sets out his stall for 2012

Under cover of discussing the Open Society and its enemies, Nick Clegg today set out his personal agenda for the next year of this government. Indeed, Clegg's speech to Demos earlier was perhaps the purest distillation of his politics since the big set-piece number he delivered at the Lib Dem conference in 2008. It contained many of the same themes as that earlier speech: ‘social mobility’, ‘civil liberties’, and ‘democracy’. And it added a couple more for good measure: ‘political pluralism’ and ‘internationalism’. The Deputy Prime Minister described these five political impulses as ‘the source of my liberalism’.

Rudd’s straw man argument about our EU membership

As the isolation hysteria over Cameron’s EU veto starts to fade, attention is now shifting to the more existential question of what kind of relationship the UK should have with Europe. In a piece for today's Times (£), the chairman of Business for New Europe, Roland Rudd — who, incidentally, used to argue passionately in favour of the UK joining the euro — takes aim at those who want Britain to replicate a Norway-style model of European cooperation. Arguing that Norway endures so-called ‘fax machine diplomacy’ — no influence over EU laws that it must nonetheless accept — Rudd says that ‘the choice now is to do what Norway does, or remain in the EU.

Cable: Cameron put political gain ahead of national interest

While we're on the subject of LibCon divide, it's worth noting Vince Cable's remarks to Andrew Marr this morning. The headline above is merely a paraphrase, but it's pretty close to what the Business Secretary actually said: ‘It was largely political. Certainly the Prime Minister’s got a sort-of short-term boost from it, but it doesn’t actually deal with the long-term fundamental problems in Europe.’ Seems to me that there have been harsher words deployed this week, but few harsher sentiments. In the spirit of, erm, ‘getting on with my job as I always do’, Cable is going especially far in attacking his coalition partners. Vince, as always, remains One to Watch in 2012 — and mostly for the wrong reasons.

Another sign of coalition splits over Europe

Coalition tensions over Europe are again threatening to be the story this morning. Nick Clegg has told The Guardian's Patrick Wintour that Britain has 'signalled we are happy for them [the Eurozone plus group of countries] to use EU institutions' to enforce any new treaty they agree between themselves. This is a striking claim given that David Cameron has not publicly said that he would accept this. If the Deputy Prime Minister's summary of the coalition position is accurate, then Cameron will face criticism from eurosceptics that he is backsliding on his veto. But for all Clegg's criticism of Cameron handling off the summit, he remains unconvinced by the plans that the eurozone plus countries are now pursuing.

Clegg rebukes French PM

Normally, 'read-outs' on telephone calls between members of the British government and their counterparts overseas are fairly bland affairs. But today's one on a conversation between Nick Clegg and the French Prime Minister Francois Fillon is an exception to this rule. Clegg, we are told, informed the French PM that 'that recent remarks from members of the French Government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.' To be sure, there is some more diplomatic language before and after this (the full text is at the bottom of this post) but the willingness of the deputy Prime Minister to be quite so sharp with the French is striking especially given the tensions in the coalition over Europe policy these past seven days.

Clegg tries to rebuild EU bridges

What are the Lib Dems up to? On Tuesday, Clegg, Cable, Alexander, Huhne and Laws met with 'Business for New Europe', a group of pro-European business leaders, in what the FT describes as as 'a very public display of engagement with business over Europe' and the front page of today's Mail calls 'plotting to rally business chiefs against Cameron over Europe'. It is, of course, not surprising to see senior Liberal Democrats talking to pro-EU business people and advocating more engagement with Europe. But it does highlight what will be a key goal of the Lib Dem leadership over the next few months: building bridges with Europe, particularly to reconnect with traditional, europhile Lib Dem supporters following the PM's veto last week.

A victory for Labour, but not necessarily for Ed Miliband

‘This result... is a victory for Labour that shows the progress we are making under Ed Miliband's leadership; a vote of confidence in the way that Labour is changing...’ Or, rather, it isn't. Whatever Labour's winning candidate in Feltham and Heston, Seema Malhotra, says, this byelection result was little more than an unsurprising Labour victory in a Labour area. The opinion polls, as we know, show more comprehensively what people think of the ‘progress’ that Labour is making under Ed Miliband's leadership. And it's far from a vote of confidence. Which isn't to say that Malhotra underperformed in her byelection victory, last night. Not at all. Labour actually increased their share of the vote — from 43.

The veto arguments rumble on

The Times has a very interesting story (£) today on page 17. It claims that David Cameron had agreed to inform Nick Clegg if it appeared that Britain was going to be isolated at last week’s European Council. The significance of this is that it suggests that the Lib Dems believed they would be consulted before the government vetoed anything. This news emerges after senior Liberal Democrats have privately questioned why their leader did not insist that Cameron only use the veto once he had Clegg’s explicit agreement. The Times also reports that this negotiating protocol did not envisage a situation where Britain was left in a minority of only a couple of countries.

26 versus 1 — really?

Judging from much of the coverage in UK media, you would be forgiven for thinking that Britain is on the fast track to becoming the North Korea of Europe — eccentric and completely isolated from the rest of the world. Indeed, the media narrative over the past couple of days has largely treated the agreement reached at the summit as concrete, supported in full by everyone apart from Britain. Or ‘27-minus’, as Commission President Jose Manuel Barroso put it. The reality, of course, is quite different. Leaving aside whether Cameron could have played his cards better (he could have), as Gideon Rachman pointed out in yesterday’s FT, ‘the picture of an isolated Britain’ will become blurred as the rest of Europe grapples with the Merkozy deal.