Archive for April, 2011

France has called for an easier mechanism to temporarily suspend an agreement which allows freedom of movement across 25 European countries.

The move follows an influx of migrants from Tunisia and Libya into Italy.

Italy’s decision to grant Tunisians 20,000 temporary residence permits, allowing free travel in the passport-free Schengen zone, has angered France.

Last week, French officials temporarily stopped trains with migrants crossing the border from Italy into France.

The decision sparked anger between Italy and France, with Italy accusing its neighbour of overstepping the treaty on border-free travel.

Exceptional circumstances

In an off-the-record but widely-reported briefing, a senior French official said: “The governance of Schengen is failing. It seems there is a need to reflect on a mechanism that will allow a temporary suspension of the agreement, in case of a systemic failure of an external (EU) border.”

The official, at the presidential Elysee Palace, said that any such an intervention would be provisional, until any “weakness” in the system was corrected.

The BBC’s Hugh Schofield, in Paris, says that this is a highly controversial idea, deliberately floated by the French government just before the Easter break when any reaction from Brussels will inevitably be slow in coming.

Suspension of the agreement is permitted under the Schengen Pact, but only in the case of a “grave threat to the public order or internal security”.

Under the current agreement, in these exceptional circumstances, border controls can only initially be reintroduced for a maximum of 30 days.

Mr Sarkozy is due to address the problem of migrants entering France through Italy when he meets Italian Prime Minister Silvio Berlusconi on Tuesday in Rome.

Earlier this month, Italy and France agreed to launch sea and air patrols to try to prevent the influx of thousands of people from Tunisia, Egypt and Libya.

Many Tunisians have close ties with France – a former colonial power – with friends and relatives in French cities.


Credit ratings agency Moody’s has downgraded its rating of Irish banks to junk status, adding renewed pressure on the eurozone’s weaker countries.

It follows last week’s downgrading by Moody’s of the Irish Republic’s sovereign debt rating.

Moody’s downgraded the long-term bank deposit ratings of Allied Irish Banks, EBS and Irish Life & Permanent by two notches to Ba2.

Bank of Ireland was downgraded to Ba1, one notch above its rivals.

The move sent the Irish Republic’s borrowing costs up, and came after a rare spell of positive news last week when Dublin passed a review of its economic progress by its international creditors.

Last month, the Republic’s central bank disclosed that the cost of bailing out the bank sector could reach 70bn euros.

Last year, the country needed an international bail-out worth 85bn euros.

The International Monetary Fund and the European Union, which are providing the bulk of the rescue funds, said on Friday that the Republic was making “good progress” on overcoming its economic crisis.

However, Moody’s remains concerned about Dublin’s ability to push through a restructuring of its own debts and that of the now mainly-nationalised banking sector.

“Should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow,” Moody’s said in a statement.

“Moreover, a further deterioration in the country’s economic outlook would also exert downward pressure on the rating.”

Hungary’s parliament has voted in favour of a new constitution which ends the transition from a totalitarian to a democratic system, its authors claim.

Two of the three opposition parties walked out of parliament before the vote.

They accuse the governing Fidesz party of imposing divisive right-wing ideology on the country.

The votes – 262 in favour to 44 against with one abstention – reflect the two-thirds majority enjoyed by Fidesz.

A storm of applause erupted from the benches of the governing party, followed by the Hungarian national anthem, once the result was declared.

The opposition far-right party Jobbik voted against the constitution.

The Socialist and Green parties walked out of the chamber before voting began.

‘Democracy undermined’The authors of the constitution call it a basic law for the 21st century.

One article limiting the size of the national debt has won international praise.

More controversial is the preamble which stresses Hungary’s Christian roots.

Other criticisms include limits to the authority of the constitutional court and a reduction in the number of parliamentary ombudsmen.

A paragraph on the protection of the unborn child has the potential to open the way to limits on abortion.

The new constitution is the latest and most spectacular in a series of laws which the government has rushed through since election a year ago.

The government insists these strengthen Hungarian democracy.

Opponents say democracy is being steadily undermined.

France acted within its rights when it halted trains carrying North African migrants crossing its border from Italy, the European Commission says.

Home Affairs Commissioner Cecilia Malmstroem said French officials had cited “public order reasons”.

An EU spokesman also said France was not obliged to grant entry to people with the temporary residency permits given to some migrants by Italy.

Italy complained that the move violated EU rules on the free right to travel.

For those legally living in the 25 countries in the Schengen Area – to which France and Italy belong – no travel documents are required.

‘Strong protest’Earlier on Monday, the French interior ministry said the rail link between Menton, France and Ventimiglia, Italy, was operating normally.

It said there had been an “isolated problem” caused by hundreds of activists on one train planning an “undeclared demonstration” in France, and posing a problem to public order that was temporary in nature.

Cecilia MalmstroemEuropean Commissioner for Home Affairs

“At no time was there a… closing of the border between France and Italy,” spokesman Pierre-Henri Brandet said.

He estimated that up to 10 trains may have been affected by the disruption, five on each side of the France-Italy border.

The statement came after the Italian ambassador in Paris was instructed by Foreign Minister Franco Frattini to lodge a “strong protest” of the blocking of the trains. The ambassador called the move “illegitimate and in clear violation of general European principles”.

While Mr Frattini acknowledged that the activists might have given them a cause of concern, he insisted it was not a “sufficient reason to justify sealing one of the most heavily used and sensitive European borders”.

The migrants had the proper paperwork to enter France, he added.

Italy has been giving temporary residence permits to many of the 26,000 Tunisians who have entered the country illegally to escape the unrest in the region in recent weeks, overwhelming refugee centres. Many have ties to France, and Italy says they should be able to travel there.

A boat carrying 600 migrants arrives in the port of Lampedusa on April 8, 2011
Large numbers of North African migrants have been landing on Italian shores

France has said it will grant entry to migrants holding the permits only if they can demonstrate that they can support themselves financially.

At a news conference on Monday afternoon, Ms Malmstroem said she had received a letter from France explaining the “temporary” disruption was the result of “public order reasons”.

“It may be that this is not covered by the Schengen border code rules. But it would seem that they had the right to do this,” she said.

EU spokesman Michele Cercone also said the residence permits were not visas, and France was under no obligation to admit people having neither EU visas nor EU passports.

Vodafone is to sell its 44% stake in the French mobile phone operator SFR to Vivendi for 7.95bn euros (£7bn).

The deal gives Vivendi, France’s biggest mobile phone business, full control of SFR and ends months of talks with Vodafone.

The UK company has been slimming down its portfolio, and recently sold stakes in Chinese and Japanese mobile operators.

Vodafone will return £4bn to its shareholders by buying back shares.

The UK company’s chief executive, Vittorio Colao, said in a statement that Vodafone would continue sales of some assets in operations it does not control.

“The sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy,” he said.

Vodafone has already sold its minority stakes in China Mobile and Japanese carrier SoftBank. The UK company is also looking sell its interest in Poland’s Polkomtel.

Last month Deutsche Telecom, agreed to sell its T-Mobile America business to AT&T for $39bn (£24bn).

Stronger markets

Analysts predicted more restructuring and assets sales in the industry as telecoms giants look to raise money to invest in their networks.

Robin Bienenstock, analyst at Sanford Bernstein, said the Vodafone and Deutsche deals reflect a desire to exit countries where they had non-controlling interests to focus on markets where they were stronger.

“You’re going to see a massive portfolio clean-up among telecom operators because they need capital to reinvest in their core networks.

“The only way to do that is to jettison the weak stuff and plough money into the markets where you are stronger. This is a scale game.”

Vivendi operates a range of businesses, including Universal Music, the record label behind Lady Gaga, Justin Bieber and Rihanna.

It also controls video games maker Activision Blizzard, Brazilian telecom company GVT, and Canal Plus television.

Vodafone’s deal with Vivendi is expected to be completed by June.