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Dispatches

European Political and economic news

The EU

After months of protracted debate, Brussels agreed to cut mobile roaming rates within the EU, which had been costing mobile phone users up to six times more to make a call when travelling abroad as it would from home. Under the new rules, due to come in at the end of August, it will now cost a maximum of 49 cents a minute to make calls and 24 cents a minute to receive them. Critics of the move say it interferes with the market and will lead to mobile operators raising other charges to make up for the revenue shortfall.

The UK

Tony Blair finally announced his resignation as British prime minister. He said he intended to vacate 10 Downing Street on 27 June. His unelected successor, chancellor Gordon Brown, says he will focus “less on spin and more on substance.” The governing Labour Party suffered losses in the May local elections to a resurgent Conservative Party led by David Cameron. The local elections also saw Scotland fall to the Scottish Nationalist Party, which is promising a referendum on links with the UK.

France

Nicolas Sarkozy was sworn in as the new French president after defeating his Socialist rival Segolene Royal. Sarkozy has promised radical changes for France, with a wave of reforms expected. Amongst them are expected to be lower taxes for businesses, a curbing of bureaucracy, an end to some work-place restrictions and a generally more proactive economic policy. His eclectic choice of ministers was generally greeted with enthusiasm by the French media, especially that of Socialist Bernard Kouchnar as foreign minister and Francois Fillon as prime minister. Opinion polls suggest Sarzkozy’s UMP will strongly out-perform the Socialists in the forthcoming June parliamentary elections.

Portugal

Prime minister Jose Socrates says Portugal will use its presidency of the EU to focus attention on “the south”, echoing the presidency of Finland – which focused on the “northern dimension” when it held the presidency last year. The move is almost certainly in anticipation of Slovenia’s intention to prioritise the Balkan region when it takes over from Portugal in 2008. Portugal also plans to hold an EU-Africa summit and is seeking to boost relations with its former colony Brazil, now the largest economy in South America. Priority areas of discussion will include employment, energy, human rights and trade.

Netherlands

The takeover battle for ABN Amro showed little sign of easing, with bids from Barclays Bank and a consortium comprising the Royal Bank of Scotland, Belgium’s Fortis and Spain’s Banco Santander promising very different futures for the Dutch bank. The first bid would create another mega-bank, whilst the latter hostile and higher bid would see ABN Amro break up as the consortium members added relevant parts of the bank to their own operations. Observers say ABN Amro’s future may not be clear for several months and agree that other takeovers in the sector are inevitable.

Serbia

Serbs found two reasons to celebrate: winning the Eurovision Song Contest – a triumph that had people celebrating in Belgrade’s streets and the creation of a new government, a mere 16 weeks after elections were held and just hours ahead of the deadline after which new elections would have been called. The new government will be much like the previous, an uneasy coalition of moderate nationalists and reformers. Priorities will include seeking to implement economic reforms – vital for a Stabilisation and Association agreement with Brussels – and managing the expected loss of the province of Kosovo, which most expect to achieve independence later this year (albeit under close UN supervision). Boosting co-operation with the International Criminal Court is also high on the agenda.

The EU

Ministers from the 25 EU member states concluded a dismal summit with Russia in the city of Samara, with both sides admitting nothing of substance was agreed, and no final being communiqué released. The summit marks a low point in relations between Brussels and Moscow due to Russia’s ongoing trade war with Poland, the continued closure “for repairs” of a Russian oil pipeline to Lithuania, suspicions that Russia was behind the cyber attacks against official websites in Estonia and more generally, Russia’s antagonistic energy politics and creeping authoritarianism. The failure of the summit vindicated those within the EU who had earlier suggested it should be cancelled until Russia became more co-operative.

Estonia

One of Europe’s most high tech economies was subjected to a sustained barrage of cyber attacks, with many official internet sites crashing after receiving thousands of hits a second against the more usual thousands in a day. Officials in Tallinn suggested Russia was behind the attack after Moscow’s strongly-voiced criticism of the Estonian government’s decision to remove a Soviet war memorial from the city centre to a suburban park. Estonia is a European leader in e-commerce and uses the Internet for a wide range of official purposes, including tax collection (some 80% of tax returns are filed electronically, the highest proportion in the world).

Montenegro

The world’s youngest state celebrated one year of independence from Serbia with its government calling for an intensification of reforms to enable Montenegro to join the EU as soon as possible. After joining NATO’s Partnership for Peace programme in December, Podgorica signed a Stabilisation and Association agreement with Brussels in March and has been implementing economic reforms to boost living standards and promote convergence with the EU. Its main domestic priority is introducing a new constitution – Serbs, who account for one third of the 600,000 population, want Montenegro defined as a community of nations to bolster recognition of their status.

Turkey

The uneasy balance between secularism and religion broke down as the opposition – backed by the Army – twice rejected the Islamist government’s candidate for president, foreign minister Abdullah Gul, prompting his resignation from the contest. With parliamentary elections bought forward from November to July 22, Ankara, Istanbul and Izmir were amongst the cities to see huge demonstrations calling for the defence of secularism. With plans underway to hold direct presidential elections (until now parliament has appointed candidates to the hugely symbolic role), fears have been growing that the governing AKP will win both and use its second term to unroll more faith-based legislation. In an effort to bolster the secular vote, two previously warring right-of-centre parties, Motherland and True Path, announced their merger.

Russia

In a major blow to Western countries lobbying to improve their energy security by way of a new pipeline running under Azerbaijan and Turkey, Russia, Kazakhstan and Turkmenistan have agreed to construct their own pipeline to transport gas from Turkmenistan through Russia at a cost in excess of €800m. Observers chalked up the announcement as another success for President Putin who has been working hard to maintain Russia’s control over its own and the CIS’ energy resources. The new pipeline, due to be completed by 2012, should be able to transport between 20-30 million cubic metres of gas a year. Putin has ruled out other countries participating in the pipeline.

Italy

Unicredit and Capitalia announced plans to merge, creating the world’s fifth largest bank – and the second largest in Europe, after HSBC – in a deal estimated at €22bn. It reflects the desire of the Italian authorities and the Central Bank to improve efficiency and boost Italy’s presence in the international financial sector, which had been held back due to the high level of fragmentation. Analysts expect further deals to be announced over the coming months. Financial regulation in Italy is also undergoing change with the responsibilities of the five existing authorities expected to be subsumed into just three.