The next days will see EU politicians continue to try and manage the political
fallout arising from the two rejections of European Constitution last week.
The most profound question facing the bloc is whether the ratification process
should continue - with support for this strongest in France and Germany but
questioned in Britain, the Netherlands and the Czech Republic. British foreign
secretary Jack Straw is set to say more about London's position on the ratification
process before parliament on Monday.

Meanwhile, behind-the-scenes negotiations will continue on the next EU budget
round as the EU's Luxembourg presidency struggles to reach a deal next week,
trying to stave off the impression that the bloc is in the midst of a political
crisis. Foreign ministers will gather on Sunday evening (12 June) for a closed-door
'conclave' meeting where Luxembourg is hoping governments will show their real
playing hands - ahead of the leaders' summit just five days later.

Eurozone finance ministers will gather on Monday evening amid a flurry of
speculation about the effect of the French and Dutch referendums on monetary
union and on the euro. Doomsday predictions were further fuelled by a call
last week by the Italian welfare minister for a referendum on whether Italy
should revert to the country's previous currency, the lira.

All 25 finance ministers will meet on Tuesday with the likely aim of trying
keep a united front by expressing their support for the single currency.

EU budget
European Parliament will gather for its June session in Strasbourg with last
week's event set to top the agenda in the corridors and during debates on
Tuesday and Wednesday.

MEPs will also finalise their position on the next EU budget round - known
as the financial perspective - from 2007-2013.

They will debate and vote on a report by German centre-right MEP Reimer Boge,
the central point of which calls for a cap on the budget at 1.1 percent of
gross national income (GNI) in contrast to the commission's call for 1.14 percent
of GNI.

The other central plank of the report is the call for the EU's current agricultural
budget not to be increased when Bulgaria and Romania join the bloc in 2007
- effectively meaning a farm aid reduction after this date, with the difference
to be covered by national governments.

Stability pact
The House will also on Thursday give its verdict on the revised Stability and
Growth Pact, the rules underpinning the euro. In committee, MEPs stressed
that the revised pact must not lead to a loosening of budgetary discipline
by governments.

MEPs in the legal affairs committee will debate whether to accept a proposal
by the EU presidency that would regularise their salaries and the way they
may claim expenses.

Meanwhile, on Wednesday there will also be a vote on a motion of censure against
the commission and particularly its president Jose Manuel Barroso. This will
be put forward by British MEP Nigel Farage who claimed the commission president
had given rise to a conflict of interest by accepting a cruise with Greek shipping
baron Spiros Latsis. However, the motion is likely to gather few votes in favour
as it has been condemned by most by the large groups in the parliament, representing
the vast majority of MEPs.

Italy under fire
Italy will be in the spotlight on Tuesday when the Commission is set to open
the so-called excessive deficit procedure against the country at a meeting
on Tuesday. Italy's budget deficit breached the limit of three percent of
GDP set by the stability pact both in 2003 and 2004.

At the meeting, the commission is also set to produce a paper on the reform
of state aid rules.

Energy efficiency (1st reading, debate Tuesday)
Improving energy efficiency is the aim of a directive receiving its 1st reading
on Tuesday. Almost 100 amendments have been adopted at the committee stage,
dealing with, among other things:

  • levels for national targets on energy-saving;
  • tougher public sector targets to set an example for society;
  • subsidies for energy-efficiency programmes;
  • definitions of Public-Private Partnerships;
  • energy efficiency as criteria for use in public procurement contracts.

This is the first reading in the codecision procedure. The amendments adopted
by the European Parliament go next to the Council of Ministers. Unless the
Council accepts all of Parliament's amendments, the proposal will return for
a 2nd reading of the European Parliament at a later date.

Trans-European energy networks (1st reading, Tuesday)
MEPs will have their 1st reading of the guidelines for funding of Trans-European
Energy Networks. An annual budget of about €25m overall is spent mainly
on feasibility studies for cross-border projects. Among the projects listed
for funding in the UK are:

  • Undersea electricity cable links England-Netherlands; Ireland-Wales;
  • Electricity connection and gas pipeline UK-Norway;
  • Natural gas supply to Northern Ireland;
  • Improved gas transmission networks in the UK.

Amendments adopted in the European Parliament committee update and rearrange
the list of priority projects and clarify the role of the European Coordinator.

Cash movements across EU borders (2nd reading Regulation, Tuesday)
MEPs will hold their 2nd reading of a proposed Regulation governing controls
on cash entering or leaving EU countries. The aim is to prevent large cash
sums moving across EU borders for the purposes of money laundering. MEPs
look set to agree with the Council of Minister's proposal that the ceiling
beyond which cash must be declared is reduced from €15,000 to €10,000.
Amendments adopted at the committee stage do, however, tighten up the provisions
on confidentiality and protection of personal data.

Hazardous substances - oils in tyres (Wednesday)
MEPs will have their 1st reading of a proposed amendment to the 1976 hazardous
substances directive, this time aimed at reducing polycyclic aromatic hydrocarbons
in extender oils and tyres. The proposal would reduce the risk of carcinogenic
emissions from tyre debris - a time frame for the development of safe tyres,
including racing car tyres, is set down in amendments tabled by MEPs at committee

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