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The Greek sovereign debt crisis is forcing Europeans to rethink the coordination of their national economic policies, confronting the euro area with its most severe test since its launch eleven years ago.

In January 2010, Greece was found sitting on debts that are expected to hit 290 billion euro this year. Its budget deficit stood at 12.7% of gross domestic product, more than four times the EU limit. 

Faced with an unprecedented speculative attack on the euro, EU countries were compelled to act decisively in order to calm jittery financial markets. In May, they agreed to establish a rescue mechanism worth €750 billion to protect the euro from collapsing under the weight of accumulated debt (EurActiv 10/05/10). Root causes left unaddressed However, the short-term fire-fighting measured soon proved insufficient to tackle the root causes of the problem as markets started questioning the loose coordination of national policies that underpin the eurozone’s economic governance. Indeed, EU institutions currently only have limited powers on economic policy, an area where unanimity decision-making remains the rule. The EU’s main instruments include reviews and non-binding recommendations by the European Commission, such as the stability and convergence programmes and Broad Economic Policy Guidelines, which are submitted for approval by member states in the EU Council of Minister.

Member states are considering taking the EU Parliament to court if it does not back down on demands for new powers on EU foreign policy and international agreements, EUobserver has learnt. Ambassadors representing member states at a meeting in Brussels on Wednesday (13 October) signaled their discontent over an inter-institutional agreement between the European Commission and the EU legislature which may give fresh powers to euro-deputies, especially when it comes to international negotiations on behalf of the EU.

The draft report, according to an analysis by the council of ministers' legal services, could lead to a stand-off between EU institutions if adopted as such next week in Strasbourg. "The court option is not off the table," one EU source said. Ambassadors will come back to the matter in their meeting next Wednesday, following the MEP's vote in the plenary. The crux of the matter is to what extent MEPs can be part of EU delegations to multilateral and bilateral meetings and negotiations with other countries. According to the draft, the Parliament wants to have its representatives guaranteed participation in all multilateral, but also bilateral agreements "of particular political importance" - for instance on trade or fisheries.

‘Adoption of the Resolution on strategy of the EU enlargement by the European Parliament is an exceptionally positive event for Serbia. Still, future decisions by the EU ministers should not be prejudiced’, Bozidar Djelic, Serbia Deputy Prime Minister for European integration said yesterday. This moderate reaction to decision by the European Parliament to accept as an obligation the EU enlargement onto the West Balkans and to request from the EU Council urgent unblocking of the transient trade agreement between Serbia and the EU is only on the surface while under it there is a hectic and increasingly successful activity by Serbian diplomacy leading towards filing of application for the EU membership even as early as in 2014. The decision over unblocking of the SAA is to be made at the EU summit scheduled for December 10. Until then Serbian officials have to do a lot of work. Thus, within diplomatic initiative in Brussels, Serbia President shall attend the meeting of ministers deciding on visa suspension on November 30. After that the Foreign Minister Vuk Jeremic is to meet with his EU counterparts at the OSCE meeting in Athens on December 2. The USA Secretary of State Hilary Clinton is expected to come to the meeting. She recently openly supported unblocking of the SAA with Serbia. A day earlier the Chief prosecutor of the Hague Tribunal Serge Brammertz shall present to the UN Security Council the most positive report ever on cooperation by Serbia with the Hague Tribunal. Minister Jeremic shall visit Brussels on December 7 and 8 when the EU ministers are to decide on the SAA unblocking. He shall speak at the Summit on December 10. A day before the summit Deputy Premier Djelic is to meet with the Foreign Minister of Spain, a chairing country and with the EU enlargement commissioner. Serbia President Boris Tadic said that ‘Serbia shall file application for membership after unblocking of the transient trade agreement’. According to his words the time for candidacy shall come when it is clear that our application is going to be accepted.

Serbia took a step forward yesterday (14 June) on the road to joining the European Union, with EU governments rewarding its improved cooperation with the UN war crimes tribunal for the former Yugoslavia.

EU foreign ministers agreed at a meeting in Luxembourg to start implementing an accord with Serbia known as the Stabilisation and Association Agreement (SAA), a prerequisite of any further assessment of a country's prospects for membership.The decision follows a positive assessment of Belgrade's assistance given to the International Criminal Tribunal, and bolsters Serbia's efforts to shake off international isolation following wars in the aftermath of the collapse of Yugoslavia.

Background Belgrade was offered the chance to sign an EU-Serbia Stabilisation and Association Agreement (SAA) in April 2008, as the Union moved to boost pro-European forces ahead of crucial national elections (EurActiv 30/04/08). Serbia ratified the SAA in September 2008 (EurActiv 09/09/08). However, the agreement is yet to enter into force, leading the European Commission to consider a membership application as premature. On the EU side, the Dutch government's attitude has been the only remaining obstacle to the implementation of the SAA. Some EU member states have been pushing for the SAA to be ratified since the capture of war criminal Radovan Karadzic in July 2008 (EurActiv 22/07/08). But Dutch officials insisted they will only withdraw their veto once two other wanted war criminals have been arrested and handed over to the International Criminal Tribunal for the former Yugoslavia (ICTY). They also said they were awaiting confirmation from the tribunal's chief prosecutor Serge Brammertz of Belgrade's full cooperation with the court.

October 19th 2010: European Council President Herman Van Rompuy officially visited Montenegro for the first time where he met with Prime Minister Milo Djukanovic, President Filip Vujanovic and Parliament President Ranko Krivokapic. He discussed with Montenegrin officials about cooperation, reforms in Montenegro, the forthcoming European Commission opinion on Montenegro, EU membership and other regional matters.

Member of the European Parliament and rapporteur on Montenegro Charles Tannock also visited Podgorica a few days ago, on October 15, for talks on Montenegro - EU relations and potential membership. Montenegrin PM told Mr Tannock that he expects a positive opinion from the European Commission in early November. He explained that by ‘positive opinion’ he means a recommendation for Montenegro to become an EU candidate country and a recommendation, conditional or not, for the opening of EU accession talks in the near future. Mr Tannock said that the EU should make no demands for an unreasonable delay before opening negotiations with Montenegro, adding that Macedonia’s situation should not be a general model for the enlargement process. He pointed out the importance of judging every aspiring EU member on their own merits, rather than all grouped together. He also said “And in the regatta, which I think will now ensue, Montenegro remains a good news story. Even if that generates a little bit of envy from one or two of your neighbors.” Montenegrin  PM pointed out that he considers wrong the concept of simultaneous accession of Serbia, Kosovo, Bosnia & Herzegovina and Montenegro to the European Union, and he prefers the ‘regatta model’ in EU enlargement. He told newspaper “Pobjeda” that he believes idea of simultaneous accession is not the right concept. “If you try to force the package, this is like a train, which in the Balkan case adjusts the speed to the slowest car”, said Djukanovic.

Foreign relations chief Catherine Ashton will turn her attention to choosing the top officials and the main building for the European External Action Service (EEAS) after the EU Parliament approved the legal blueprint for the new body. MEPs in a landslide result in Strasbourg on Thursday (8 July) backed the final EEAS set-up by 549 votes against 78 with 17 abstentions.

The EEAS today boils down to Ms Ashton and a team of 30-or-so officials in one corridor on the 12th floor of the European Commission building in Brussels, struggling to work with EU experts in the commission's Charlemagne building next door, the EU Council building across the road and dozens of other bureaus. From 1 December, she will take command of some 1,500 officials housed under one roof in the heart of the EU quarter in Brussels, as well as 800 EU diplomats in the EEAS' 136 foreign embassies.

In a sign of tension in the Lisbon-Treaty-era EU, French Prime Minister Francois Fillon and Spanish foreign minister Miguel Angel Moratinos defended member states' prerogatives in Strasbourg on Tuesday. Mr Fillon reportedly said it is a "red line" for Paris that member states will take foreign policy decisions, while Ms Ashton will simply "implement" them. Mr Moratinos said that in some cases, such as human rights in Cuba, bilateral diplomacy is more effective than EU-level action. For his part, the leader of the Liberal group in the parliament, Belgian MEP Guy Verhofstadt, on Wednesday attacked the "19th century" mentality of "nation states." "What century are we living in? Terrorism, does that stop at borders? Climate change? Migration?" he said.

A series of compromises and a new draft of next year's EU budget has increased optimism that member states and the European Parliament can reach a deal on the 2011 spending plan before Christmas. But parliament's call for a role in discussions over the bloc's next multi-annual budget (post 2013) could still scupper a final accord.

A day earlier, member-state diplomats agreed to drop previous calls for unanimity voting on decisions to transfer money between EU budget headlines. Parliament has made the greater level of spending flexibility, provided by member state qualified majority voting, a key demand in the ongoing battle over the 2011 EU budget.

Officials from all sides will next meet on 7 December to discuss the budget draft, in a bid to enable a parliamentary vote on the final version at its 15 December plenary session, the last of the year. Sources say Mr Barroso's announcement this week to come forward with proposals on EU 'own resources' in June 2011 has enabled both parliament and member states to claim victory on the controversial issue by breaking the link with the 2011 budget debate but ensuring future discussion on the subject. Now the parliament's demand for a role in discussions over the EU's post-2013 multi-annual budget remains the main outstanding stumbling block.

Better communication of EU affairs by public service broadcasters is key to bridging the gap between the European Union and its citizens, said the European Parliament yesterday (7 September), highlighting in particular the "huge potential" of social media to reach out to young people. 

While acknowledging the "immense potential" of social media like Facebook and Twitter to reach young people, MEPs warned that "their reliability as sources cannot always sufficiently be guaranteed," that they "cannot be considered to be professional media" and may "give rise to serious breaches of journalistic ethics". "Caution is required when taking up these new tools," the report declares, stressing "the importance of drawing up a code of ethics applicable to new media".

Other more controversial proposals survived, however: the Parliament advocated "incorporating the EU more fully into all educational curricula" and teaching in schools "courses in journalism using new media".

Ahead of an EU summit opening today (28 October), Liberal group leader Guy Verhofstadt warned that the European Parliament was determined to use its new powers under the Lisbon Treaty and would not let economic governance plans be "diluted" by Germany and France.

But Verhofstadt, who leads the Parliament's Liberal group, warned that such backroom deals were now over. The European Parliament, he said, would have full co-decision powers on legislative proposals that will come out later in the year to flesh out the EU's new economic governance. His warnings were echoed by other political groups in Parliament, including the centre-right European People's Party (EPP), which commands the largest number of seats in the Strasbourg assembly. Iñigo Mendez De Vigo, a Spanish MEP in charge of institutional issues at the EPP, said he welcomed the Task Force's proposals. But he added that "they should take into account that the European Parliament is now co-legislator and will play its full part in defining the reforms to come".  "I regret that the French-German proposal does not even mention the European Commission, which also has a say on this issue," De Vigo said, adding the Parliament should also be more involved. The Greens, the fourth largest group in Parliament, also backed the Liberals and the EPP, in a move which could herald a long battle with member states over the economic reform plans. The Parliament "will be a co-legislator on four of the six legislative proposals" on economic governance, said Belgian MEP Philippe Lamberts, saying his group was "in favour of a more ambitious and broader economic framework than the Commission and Council". Verhofstadt said he hoped this new battle would not take nine months, referring to the time it took to pass a recent package of financial supervision laws through the assembly.

In a statement, Verhofstadt detailed the three key areas where the Task Force had diluted the Commission's initial proposal and on which he said Parliament was ready to pick a fight. First, the Commission had proposed to impose sanctions on member countries with excessive deficits or severe imbalances at an earlier stage, without delay. By contrast, the Task Force argues that a political decision should be taken on the proposed sanctions, meaning that they could be blocked by a country capable of putting together a blocking minority. The result is that there will be no preventive procedure and therefore no sanctions, the liberal group leader warned. Second, the Task Force foresees a "double filter" for decision-making, involving a political recommendation by the Council before the Commission can take action. In practice, this means the Commission will be allowed to take sanctions only after a certain period, Verhofstadt said. Finally, while the EU executive had proposed that corrective action or sanctions be initiated directly by its own services, the Task Force called instead for a recommendation that would need subsequent backing by the bloc's 27 finance ministers. "It's easy to change a recommendation, and far more difficult to change a proposal by the Commission, because in that case you need unanimity," Verhofstadt explained.

Just 42% of Europeans say they trust the European Union, according to a new opinion poll, down six percentage points in just six months.

The survey also found that fewer than half of Europe's citizens see their country's membership of the EU as a positive thing, but the European Commission is clinging to the positive elements of the report, particularly on economic governance. Officials are presenting the new Eurobarometer as an endorsement of greater budget oversight from Brussels, pointing to the 75% of Europeans who said stronger coordination between member states will help weather the economic storm.

Notwithstanding the positive spin from Brussels, a deeper analysis of the report shows a crisis of faith in the Union. Just 49% of citizens view membership of the European Union as a good thing, while 47% said they do not trust the EU. Even prospective members have gone cold on the European project, with just 27% of Turks saying they trust Brussels. For the first time, the Eurobarometer included Iceland, which is currently in talks to join the EU. A startling 35% said they trusted the Union, while only 29% thought that Iceland would benefit from becoming a member.