After months of delay, EU leaders on Friday will discuss several proposals, many watered down, to reform the euro single currency after the bitter battering of the debt crisis.
The bloc’s 27 leaders meeting without Britain will largely work off proposals set down with great pomp by France and Germany, known as the Meseberg Declaration, after the site of a recent meeting between Chancellor Angela Merkel and President Emmanuel Macron.
Europe’s twin engines of EU unity, France and Germany make up nearly half of the eurozone economy. But smaller members, led by the Netherlands, have voiced their irritation at having the EU’s future announced from on high by the bloc’s biggest powers.
Eurozone budget
First the bad news for Paris.
National governments have for months been haggling over a French idea of creating some sort of budget capacity for the 19-nation single currency bloc which could be used in case of crises or economic shocks.
Even if modest, Macron sees a eurozone budget as a symbolic step towards a more centralised and mutually supportive Europe.
But austerity-loving hardliners, usually led by Germany, fear an unnecessary transfer union, with disciplined countries in the north propping up over-spenders to the south (think Greece or Italy).
In Meseberg, Merkel gave it her quiet backing and the EU commission has proposed a scaled down version — building a budget of just 55 billion euros.
Germany is open to something modest and included in the overall EU budget, which would require the approval of all the EU’s soon to be 27 member states, not just the countries using the single currency.
But the resistance by a group of smaller countries, spearheaded by the Netherlands, has been fierce and just hours ahead of the summit, the eurozone budget was not mentioned explicitly in a draft of summit conclusions seen by AFP.
European Monetary Fund
Eurozone governments will on Friday accept the general idea of upgrading the responsibilities of the European Stability Mechanism (ESM), which oversees bailouts to troubled member states, such as Greece, into some sort of European Monetary Fund.
But beyond the concept, Europeans struggle to agree on the exact missions of this future body and even on its name. Details on the body’s new mission have been delayed until December — and this reform was considered an easier one.
Everyone agrees that it should assume the role of “lender of last resort” (or “backstop”) for banks in distress if the backup mechanisms already in place prove ineffective.
But some, including Chancellor Merkel, would like the fund to rival the Commission in its power to oversee national economies. This is opposed by the EU executive, which is loath to cede power to national governments.
Banking Union
Completing the banking union is a central challenge for EU leaders, but the last missing piece is the toughest.
The creation of a European-wide deposit insurance scheme has been bitterly opposed by Berlin for years in the belief that Germany would be on the hook to save fragile banks in countries such as Greece and Italy.
Under the scheme, all EU deposits would be insured up to 100,000 euros through a treasure chest that was guaranteed by taxpayer money.
The repeated delays of EDIS, the acronomy for the European Deposit Insurance Scheme, has become a Brussels inside-joke.
— Alex Pigman, AFP

Trade war worries again permeated markets across Asia on Thursday, with mixed signals from the White House fuelling uncertainty, but energy firms kicked higher thanks to another surge in oil prices.
Concerns about the Chinese economy are also hurting confidence, with the yuan continuing to weaken and mainland stocks now in bear market territory having fallen more than 20 percent from recent highs.
Dealers are struggling to get a handle on the situation owing to confusion over Donald Trump’s trade strategy.
The president seemed to back off a plan to impose tough new restrictions on Chinese investment in the United States, soothing concerns about a conflagration between the world’s top economies.
But later his economic advisor and trade hawk Larry Kudlow warned that stern measures were still being contemplated.
“If the administration doesn’t understand what the president is trying to achieve from his trade policy, that is hardly a sign of confidence for investors,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
“It would be entirely natural if investors were a bit confused as indeed confusion reigns supreme.”
Equity markets fluctuated through the day and Tokyo ended slightly lower, while Hong Kong shed 0.4 percent in the afternoon and Shanghai closed 0.9 percent down.
Seoul and Manila both fell more than one percent, while there were also losses in Singapore, Taipei, Bangkok and Jakarta. Sydney rose slightly 0.3 percent.
In early European trade London fell 0.5 percent, Paris shed 0.4 percent and Frankfurt was 0.6 percent off.
With no sign of the trade spat easing any time soon there are growing concerns about the impact on the Chinese economy, with growth already showing signs of slowing and stocks plunging 22 percent since its 2018 peak in January.
The yuan is also at its weakest level against the dollar since December, having endured one of its worst runs since its mid-2015 devaluation that sparked a global market meltdown.
China worries
But speculation the People’s Bank of China is allowing the currency to weaken to offset the effects of any US tariffs were dismissed by Capital Economics.
“While a weaker currency could offset some of the economic damage done by US tariffs, the wider risks to financial stability would not be ones worth taking,” the consulting firm said.
Investors were also spooked by reports of a leaked report by a government-backed think tank that warned of possible “financial panic” in the Chinese economy.
Bloomberg News reported that the National Institution for Finance & Development had highlighted bond defaults, liquidity shortages and the equity market losses as being particular dangers as the country heads towards a US trade war.
“We think China is currently very likely to see a financial panic,” the study, which appeared briefly on the internet on Monday before being removed, was reported to have said.
While broader markets are swinging, energy firms continued their rally after crude prices hit a new three-and-a-half year high on the back of data showing US stockpiles plunged by the most since 2016.
The news sent Brent up 1.7 percent and WTI more than three percent higher.
The jump, which followed similar climbs on Tuesday, was aided by an outage at a key Canadian heavy-oil production facility as well as a US warning to allies that they would be hit with sanctions if they did not halt Iran oil purchases by November.
While both contracts dipped Thursday, the latest oil gains provided further support to energy firms. CNOOC, Sinopec and PetroChina were all up in Hong Kong, while Woodside Petroleum jumped 1.8 percent in Sydney and Tokyo-listed Inpex climbed more than one percent.
Key figures around 0720 GMT
Tokyo – Nikkei 225: FLAT at 22,270.39 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 28,234.34
Shanghai – Composite: DOWN 0.9 percent at 2,786.90(close)
London – FTSE 100: DOWN 0.5 percent at 7,585.05
Euro/dollar: DOWN at $1.1536 from $1.1559 at 2100 GMT
Pound/dollar: DOWN at $1.3074 from $1.3117
Dollar/yen: DOWN at 110.35 yen from 110.27 yen
Oil – West Texas Intermediate: DOWN 40 cents at $72.36 per barrel
Oil – Brent Crude: DOWN 25 cents at $77.37 per barrel
New York – Dow Jones: DOWN 0.7 percent at 24,117.59 (close)
— AFP

President Donald Trump backed away Wednesday from using emergency powers to restrict Chinese investment in the United States, choosing instead to rely on beefed up authority for a 43-year-old government body.
But what is the secretive Committee on Foreign Investment in the United States (CFIUS), the interagency body that monitors access to key sectors of the US economy?
What is it?
CFIUS is led by the Treasury Department, and comprises officials from the departments of Commerce, Defense, State and Homeland Security and others who wield great power over proposed foreign investments in areas deemed vital to national security.
President Gerald Ford created CFIUS in 1975, a time when lawmakers were increasingly alarmed at the rising investments in the United States by oil producing countries amid skyrocketing crude prices.
Companies facing acquisition by foreign entities are required to notify CFIUS, which reviews the proposed transaction and may launch an investigation to consider possible national security implications.
How does it operate?
Officials pay special attention to the possible transfer of sensitive technology to sanctioned countries as well as changes in control of critical infrastructure, telecommunications and healthcare. This process can last up to 75 days.
If CFIUS determines a proposed transaction poses national security dangers that cannot be resolved, it refers the matter to the president, who may suspend the deal or block it outright.
In 2016, there were 172 transactions referred to CFIUS for review, and 79 investigations were launched, with a single negative decision from the president, according to Treasury data, the latest year for which complete data is available. Prior to that the last presidential ruling was in 2012.
Frequently companies will simply withdraw their offers of investment in the face of a CFIUS review, as happened 27 times in 2016. But some companies will resubmit a modified proposal in an effort to address the committee’s concerns.
Proposed reform
Rather than impose specific restrictions on Chinese investment, Trump said Wednesday he would await a reform by Congress of CFIUS and export controls and use those expanded tools to address “concerns regarding state-directed investment in critical technologies.”
The House and Senate each have passed versions of the CFIUS reform which experts say have taken into consideration many of the concerns expressed by the US business sector. That includes limiting the focus to national security issues rather than a broader test of economic security or industrial policy, and steering clear of scrutiny of outbound US investments and joint ventures.
However, the two versions must be reconciled before Trump can sign the measure into law, and experts are concerned the process could prove contentious.
Notable cases
President Donald Trump in March notably blocked Singapore-based Broadcom from acquiring California chipmaker Qualcomm, citing national security concerns to thwart what had promised to be the biggest tech deal in history.
Former President Barack Obama in 2012 blocked the Chinese-owned Ralls Corp from acquiring Oregon wind farms deemed too close to a US military installation.
And in one of the most high-profile cases involving China, state oil firm CNOOC in 2005 dropped a bid to acquire American firm Unocal after CFIUS failed to investigate the deal, amid opposition from US lawmakers.
CFIUS’ work frequently has reflected the anxieties of the era.
In the 1980s, CFIUS turned to sensitive investments from a resurgent Japan. A Japanese company in 1983 withdrew its offer to acquire an American specialty steel producer whose product was classified by the Defense Department, which opposed the deal. Another Japanese firm in 1985 had to allow production of specialized ball bearings to remain in the United States to win approval for its takeover of the manufacturer.
Amendments have since expanded the US president’s authority to block mergers, acquisitions and takeovers.
Following the attacks of September 11, 2001 on New York and Washington, lawmakers became especially concerned about investments possibly tied to terrorism.
Lawmakers were outraged in 2006 after CFIUS declined to investigate after reviewing the takeover of six US ports by the Emirati firm Dubai World Ports, which ultimately sold them to an American owner in the face of heated public scrutiny.
Is it unique?
While the US process receives a lot of attention, many countries conduct similar reviews of foreign investments.
This month, expanded powers took effect in Britain allowing the government to scrutinize foreign investments that raise questions of national security.
In France, the Bureau Multicom 2, a part of the Ministry of Economy, reviews foreign investments on a similar basis, as do 11 other EU member states.
National security investment reviews are also conducted by authorities in Canada, Australia and China where the National Security Law took effect in 2015, creating an oversight function to review the national security implications of foreign investments. — AFP

Smartphone-summoned ride service Lyft on Tuesday announced it is raising $600 million in a funding round that values the Uber competitor at $15.1 billion.
The financing round is being led by Fidelity Management & Research Company, and has been joined by Senator Investment Group.
The Lyft valuation is slightly more than double the $7.5 billion figure used when the San Francisco-based company raised $500 million early last year.
Lyft has seen its valuation and business grow in the aftermath of scandals that vexed ride-share market giant Uber.
The two ridesharing giants are among the richest of the Silicon Valley “unicorns” or venture-backed startups which have not yet hit the stock market.
While Lyft has been focused mainly on the US market, it recently expanded to Toronto and other cities in the Canadian province of Ontario.
Uber last month said its revenue revved in the first quarter of this year and that its value climbed to $62 billion in a new funding round.
Uber chief Dara Khosrowshahi was hired last year to replace ousted chief Travis Kalanick, an Uber co-founder, and steer the San Francisco-based company past controversies to a stock market debut next year. — AFP

US antitrust regulators on Wednesday conditionally approved Walt Disney’s proposed $71.3 billion purchase of key 21st Century Fox assets, boosting the chances for the tie-up to create a new media-entertainment powerhouse.
The US Department of Justice approved the deal subject to Disney selling 22 regional sports networks now owned by Fox.
The news moves Disney’s proposed buyout one step closer to completion after the entertainment giant last week raised its bid in response to a challenge from cable and media conglomerate Comcast.
However, Disney-Fox is still not a done deal; Comcast was reportedly exploring partnering with another company on a higher bid.
Shares of Fox jumped 1.7 percent to $48.50 in midday trading. Disney rose 0.7 percent to $104.96, while Comcast slipped 0.3 percent to $32.67.
Disney hailed the decision allowing the company “to resolve the limited potential concerns to position us to move forward with this exciting opportunity that will enable us to create even more compelling consumer experiences.”
In reviewing Disney-Fox, the Justice Department said an asset sale was needed because Disney and Fox currently compete to sell cable sports programming in local markets around the United States.
The deal would have meant higher prices for these distributors, the agency said.
“American consumers have benefitted from head-to-head competition between Disney and Fox’s cable sports programming that ultimately has prevented cable television subscription prices from rising even higher,” said assistant attorney general in antitrust, Makan Delrahim.
“Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”
The proposed settlement will be considered by a US federal court for final approval.
‘Simpsons’ and ‘Modern Family’
Disney and Comcast have been sparring over who will get assets that include production companies responsible for “The Simpsons” and “Modern Family,” film production businesses and a key stake in the online platform Hulu.
Disney first unveiled the purchase of the Fox assets in December, hailing the deal as a means to provide more valuable content amid the rise of mobile technology and other new viewing options that have dealt a blow to conventional cable.
After Comcast came in with a $65 billion all-cash bid on June 13, Disney raised its offer last week to $71.3 billion while adding a cash component to its stock offer.
Fox said last week the Disney proposal “offers a package of consideration, flexibility and deal certainty enhancements,.”
Comcast has been reaching out to potentially partner with other companies, such as a private equity firm or technology or media company, on a joint bid, according to reports Wednesday in the Wall Street Journal and Bloomberg.
The deal would give Disney the vaunted 20th Century Fox studios along with a controlling stake in Hulu, the online platform created by media groups to challenge Netflix and Amazon.
Disney already owns the ABC broadcast television network, sports broadcasting group ESPN and major Hollywood film studios along with theme parks around the world.
The deal became possible when Rupert Murdoch, 87, and his sons decided to slim down their media-entertainment empire, leaving them with the Fox News Channel, the Fox broadcast network and some sports cable operations.
Included in the planned sale is Fox’s 39 percent stake in the British pay TV operator Sky. Murdoch has sought full control of Sky but has faced opposition from regulators in Britain. — John Biers, AFP