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EUROPEAN UNION

EU launches legal action against Germany over VW law

The European Commission on Thursday ratcheted up pressure on Germany by taking fresh legal action over a disputed law shielding Europe's biggest car maker Volkswagen from takeovers.

“Special rights granted to the German authorities are not acceptable and compatible under basic (EU) treaty provisions like the freedom of capital flows,” commission spokesman Oliver Drewes told reporters.

The commission gave Berlin a two-month deadline to respond to concerns about the law and said failure to provide answers would result in the case being transferred back to the European Court of Justice.

Last year, the European Union’s top court ruled against a law giving the German state of Lower Saxony, which owns 20 percent of VW’s shares, the ability to block company decisions. Normally a blocking minority is only accorded to those owning more than 25

percent.

Last week, the German government approved a new draft law that would effectively preserve Lower Saxony’s minority blocking position. “Failure by the German authorities to comply with the 2007 judgement could result in fines being applied by the Court of Justice,” the commission warned in a statement.

In reaction to the commission’s latest move, Lower Saxony remained defiant, with regional premier Christian Wulff describing it as “expected but regrettable.”

“In the next eight weeks, it will be a question of proving” that the new law respects the 2007 ruling by the European Court of Justice, Wulff said in a statement.

The commission warned last week when the German government approved the new draft law that it considered the move did not amount to compliance with the court’s ruling and warned that new legal action against Berlin could follow. “We don’t believe that Germany is implementing and applying this ruling in full even though they have some new legislation on the way,” Drewes said on Thursday.

VW is an iconic German industrial group and has been protected from takeovers by an initial VW law since it was privatised in 1960. German luxury sportscar maker Porsche, which wants to increase its 31 percent interest in VW, has also been leading a legal campaign of its own against the law.

Porsche, which was unable to reach an accord with Lower Saxony at a VW general assembly in April, has asked a northern German court to reject the state’s blocking minority power.

The sportscar maker, which intends to take full control of VW at some point in the future, said that as far as it was concerned the case was closed and the law should be scrapped.

“We have already said all there is to say on the subject,” a Porsche spokesman told AFP on Thursday. “The VW law is not needed. The European Commission has confirmed with this procedure our conception of law.”

The German justice ministry, which drafted the new law, said the commission’s move “was not extraordinary” because it reproached Germany for failing to respect the court ruling – but not for having drafted a new law. “We have two months and within that time will inform the commission of our intentions,” a ministry spokeswoman told AFP.

For Berthold Huber of the German trade union IG Metall however, the commission decision “is unbelievable. The VW law hinders neither the free circulation of capital nor the completion of a single market,” he said.

EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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