Daily Digest: Financial Firewall, Transactions Tax and Economic Watchdogs; EU devoted to prevent new crises

As we reported Friday, a boost of the financial firewall was agreed on during the eurozone summit in Copenhagen this weekend. By combining the European Stability Mechanism (ESM) of 500 billion and the European Financial Stability Facility (EFSF) of 200 billion and by also including 102 billion which have already been paid out as bilateral loans to Greece, the firewall reached a total of 802 billion euros.

While finance ministers of the eurozone were discussing financial issues in the Danish capital, Denmark’s second largest city of Aarhus hosted a somewhat different kind of European gathering on Saturday. Anti-Islamic groups from various European countries met for a demonstration against the “Islamisation of Europe”. The less than 200 demonstrators were exceeded in number by a counter-demonstration of approximately 2,ooo anti-racists and anti-fascists. Despite the small representation by the anti-Islamic groups, including the Danish Defense League, hosting, and the notorious English Defense League, they hope this will be the beginning of a European movement; prior to the demonstration, the groups held meetings during the week in order to join forces.

Back to Copenhagen: Since some countries, especially Britain and Sweden, have opposed the financial transactions tax, Germany proposed a new solution at the summit. German Finance Minister, Wolfgang Schäuble put forward an idea of a two-step approach: stamp duty in an ‘intermediate’ phase and then tougher measures down the line for trading company stocks and shares. The stamp duty is inspired by a tax already in force in Britain – which would presumably make it harder for them to oppose the suggestion.

It is evident that Schäuble and Berlin want increased control on the financial chaos. Schäuble now suggests having expert ‘watchdogs’ overlooking public spending in EU member states. According to Schäuble, these watchdogs are intended to provide early warnings of “abnormal developments” and “check on conformity between national financial policies and European rules”. This is to prevent such scenarios as the Greek one in the future.

EU officials who were invited to observe polling stations in Yangon for Myanmar’s by-elections yesterday state that these showed “very encouraging” signs – though admitting that this was “definitely not enough to assume that it is indicative of how the process was conducted in other parts of the country and certainly not enough to talk about credibility of elections”. Aung San Suu Kyi’s National League for Democracy party claim to have won all 44 parliamentary seats that were contested in this by-election.

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