Two senior French politicians are in Jersey to discuss tax and finance and its role as a financial centre.

Two members of the Senate Finance Committee, which looks after finance laws in France, are leading the visit to Jersey.

It follows an official visit by Jersey politicians last year.

They will be holding discussions with the Chief Minister Senator Ian Gorst and his Assistant Chief Minister Senator Sir Philip Bailhache.

The talks are expected to concentrate on Jersey's role as a finance centre and the regulations it uses.

The Senate Finance Committee president, Senateur Philippe Marini and the Committee's Rapporteur General, Senatrice Nicole Bricq, are in Jersey for the day.

Senator Bailhache said: "We are pleased to have the opportunity to host the Senate Committee in Jersey and to continue the valuable dialogue that began in Paris last year.

"It is important that senior politicians are able to see at first hand the high levels of regulation and transparency that are the cornerstones of Jersey's reputation as an international finance centre."

By Talal Al-Kanderi (With photo) PARIS, Feb 6 (KUNA) -- The State of Kuwait is a pioneer in the region in terms of its level of democracy and a truly multi-representative parliament, French Senator Philippe Marini, who chairs the French-Arab and French-Gulf Friendship Committee in the French parliament, told KUNA on Monday.
The senator said "the February 2 elections proved the strength of Kuwaiti constitutional institutions even amid great challenge." Citing the French Constitution as another example, the mp stressed "great constitutions show their excellence at times of great difficulty more than any other time." The institutional system of Kuwait played a leading role in the relationship between parliament and government. "This was most evident upon the transition of power back in 2006," where Article III of the Kuwaiti Constitution was the point of reference. He added that he ranks Kuwait along with Jordan and Lebanon as countries with uniquely truly empowered and multi-representative parliaments.
The politician referred to several factors that contribute to a democratic environment, namely freedom of the press, lively discussions and social gatherings, such as Diwaniyyas, and women suffrage since 2006.
"It is apparent there is representation for different schools of thought and value systems in the Kuwaiti Parliament, with room for formation of blocs and shifting majorities depending on the issues being discussed." To a question relating to his assessment of respect of Human Rights and freedom of expression, he said "Kuwait upholds and works on further promoting these values within the framework of a state of law and with the view of producing an atmosphere conducive to economic and social development and, therefore, prosperity for the people." He pointed out the French Friendship Committee is keenly following up with and analyzing the results of the Kuwaiti elections.
As to Kuwait's support of Arab and developing nations, the senator noted that Kuwait had always invested some of its financial surplus in aiding other nations, and not just Arab nations but African and Asian countries as well.
The MP also noted that states such as Kuwait have considerable credibility when they mediate and seek to promote world peace and stability, in view of their own policy of moderation, and their stability and realistic view of the global scene.(end) tm.wsa KUNA 061119 Feb 12NNNN

Philippe Marini répond aux journalistes de la presse polonaise, à l'ambassade de France à Varsovie, au sujet de la préparation de l'accord intergouvernemental de l'euro.

La Pologne a insisté mardi pour pouvoir participer à l'avenir à tous les sommets de la zone euro en compagnie des autres pays de l'UE n'ayant pas encore adopté la monnaie unique, en dépit de l'opposition de la France en particulier.

Cette question est l'un des sujets de friction qui s'annoncent en vue du sommet des dirigeants européens du 30 janvier où devra être adopté un nouveau traité européen visant à renforcer la discipline budgétaire commune.

Varsovie fait activement campagne avant la réunion pour que les sommets de la zone euro, désormais institutionnalisés, soient élargis aux pays qui n'en font pas partie afin de ne pas créer de divisions au sein de l'Union européenne.

"Ce n'est vraiment pas juste une demande polonaise. C'était peut-être une idée polonaise, mais de très, très nombreux pays ont rejoint cette idée", a déclaré à la presse le ministre polonais des Finances, Jacek Rostowski, en marge d'une réunion avec ses homologues européens à Bruxelles.

"Tous les pays qui sont à l'extérieur (de la zone euro) et certains qui sont à l'intérieur ont parlé et soutenu activement" la proposition polonaise lors d'une première réunion lundi soir. "Il y avait seulement une voix contre", a-t-il lancé, en visant la France.

La Pologne estime que tous les pays de l'UE amenés à adhérer un jour à l'euro --ce qui est son cas-- et ceux qui signeront le traité budgétaire sur le point d'être finalisé doivent participer aux cénacles de l'Union monétaire dans la mesure où des décisions les concernant y seront prises. Le traité, ou "pacte" budgétaire doit être adopté par les dix-sept pays de la zone euro et neuf autres pays de l'UE. Seule la Grande-Bretagne refuse.

Le ministre français des Finances François Baroin a indiqué que son pays était prêt à soutenir une formule actuellement en discussion, qui verrait les futurs sommets de la zone euro ouverts, au moins une fois par an, aux autres pays signataires du traité.

"Le compromis trouvé (...) est satisfaisant pour nous", a-t-il dit.

Paris, qui milite depuis longtemps pour la création d'un "gouvernement économique" de la zone euro, tient à une gestion bien spécifique de l'Union monétaire et voit dans l'offensive polonaise un risque de dilution du projet.

"La situation est tellement difficile qu'il ne faut pas ajouter des complications institutionnelles à un système de décision laborieux", a de son côté estimé le français Philippe Marini, président de la Commission des finances du Sénat, interrogé sur la place de la Pologne dans l'Eurogroupe, devant quelques journalistes à Varsovie.

"Je ne crois pas qu'il soit justifié de faire porter à la France une responsabilité qui n'est pas la sienne et qui est partagée par d'autres membres de la zone euro, notamment l'Allemagne", a-t-il ajouté en réponse à une question concernant le débat suscité en Pologne à ce sujet.

Il a assuré vouloir clarifier à l'occasion de son déplacement en Pologne certaines "mauvaises interprétations".

"On a parfois laissé entendre que la France était favorable à une Europe plus petite (...) une Europe plus resserrée autour de son noyau d'origine. C'est totalement faux ", a-t-il affirmé.

President Nicolas Sarkozy should resist pressure to further tighten France’s 2012 budget and press for the implementation of a European agreement to boost the region’s economic credibility, Senator Philippe Marini said.

Debate about the need for what would be a third round of tax increases and spending cuts since August has surfaced in recent weeks as national statistics office Insee judged that France is in a recession and three major rating companies said they’re considering stripping the nation of its AAA status.

 “Austerity for the sake of austerity isn’t a solution,” Marini, speaker of the French Senate’s finance commission, said in an interview. “There is a huge problem of credibility about euro-zone governance. That’s the main point.”

The remarks, coming from a member of Sarkozy’s Union for a Popular Movement who has consistently pressed the government to rein in its deficit, show the challenges facing Sarkozy as he seeks to defend France’s top credit rating while also preparing for an election that is barely four months away. Francois Hollande, the opposition Socialist Party’s presidential candidate, has repeatedly predicted new austerity measures.
   
For Marini, the ability of European leaders to put into action a Dec. 9 plan that would place constitutional limits on deficits is the most credible way to protect the credit rating. Sarkozy’s ability to change the constitution has been hampered since the Socialists gained a majority in the Senate for the first time in September.

                        European Package

“Everything is linked to the putting in place of the package agreed to at the last European summit,” Marini said. “A downgrade would target the euro zone and question its ability to tackle its own internal problems. The specific French case clearly exists, but is something quite secondary.”

Failure to implement the package risks undermining confidence, hurting growth and increasing pressure to eventually revise the budget, Marini said.

“The bigger the delay, the more likely we’ll have to look at the growth rate and the consequences for fiscal policy,” he said.

Marini praised the European Central Bank for stepping up its support for euro-area governments in recent weeks by offering three-year loans to banks and buying government bonds.

“The ECB’s position has evolved to a large extent, though international investors have not fully realized this,” Marini said. These programs “demonstrate that the ECB is ready to tackle the real problems.”

La constitution d'un pôle bancaire dédié au financement des collectivités locales et impliquant, autour de Dexia , la Caisse des dépôts et la Banque postale est très probable mais toujours en cours de discussion, a déclaré mardi le rapporteur général de la commission des Finances du Sénat, Philippe Marini (UMP).

Il a précisé que l'Etat ne prévoyait pas d'injecter d'argent public dans cette opération.

"A ma connaissance cette négociation évolue bien (.) et devrait conduire à constituer un pôle de crédit aux collectivités territoriales sous l'égide de la Caisse des dépôts et de la Banque postale", a-t-il déclaré à Reuters. "C'est toujours en cours de discussions mais l'issue parait très probable."

"L'Etat ne prévoit pas d'injecter de l'argent (dans cette) opération", a-t-il ajouté. (Lionel Laurent, Jean-Baptiste Vey pour le service français, édité par Julien Ponthus)

From former German Chancellor Gerhard Schröder to several French Socialist presidential hopefuls, the idea of a euro bond is gaining supporters. The rising popularity of this idea, however, makes it all the more troubling: In practice, it could constitute a potentially fatal threat to the euro zone.

I won't deny that I voted "no" in 1992, against the Maastricht Treaty that created the European Union as we know it and formed the basis for the euro. Moreover, so there is no ambiguity: The current crisis confirms my belief that we would all be better off if the euro had never been established.

However, I am today in favor of maintaining the euro, for the simple reason that its collapse would be an economic disaster. Unfortunately, many supporters of the 1992 "Yes" campaign have not learned the lessons of Europe's crisis and are attempting a dangerous leap forward for the EU and euro area.

To understand why the idea of euro bond is so troubling, imagine an aircraft that is undergoing engine failure while in flight. You could either land at the nearest airport to fix the engine, or attempt to exit the aircraft and repair the engine mid-flight. The latter doesn't seem like much of a solution at all—it seems more likely to end with the plane and all its inhabitants crashing to the ground. Yet this seems a bit how the euro-bond "solution" might work in practice.

Euro bonds are a seductive idea, as they would replace (at least in part) the separate debt liabilities of the governments of France, Germany, Italy and so on, with a single liability for the whole euro area. This single liability would be managed by a single European agency, which would finance itself by issuing its own bonds—euro bonds. This would allow European states to fund themselves at a single rate. Close

Even more appealing, it would let these states avoid the nasty and self-fulfilling cycle of markets panicking and demanding ever-higher interest rates from otherwise solvent governments, thus making it impossible for these governments to quickly finance themselves in the marketplace. It's this cycle that threatens to spread the crisis to Spain and Italy, whose economies are too big to be rescued by the EU's existing emergency funds.

The difficulties in the euro-bond idea appear when we consider how such a project would actually operate in practice. First, in order for the euro-bond-issuing agency to finance itself at a low enough rate, investors would need a certain degree of confidence in the agency and thus in the European governments guaranteeing it. But if each state in the euro area were only guaranteeing a portion of the agency's debt, the euro-bond chain would only be as strong as its weakest link. We thus arrive at the notion that every euro state should guarantee the debt of every other euro state.

But of course today, the euro zone's supposedly "frugal" states don't trust the spendthrifts. So for euro bonds ever to see the light of day, they would have to include what are known as "institutional locks." This would in effect mean permanently centralizing European nations' budget decisions, making them the responsibility of the whole euro zone, such that Europe's frugal governments would receive sufficient control over the decisions of their spendthrift partners.

This would in turn require heavy modifications to the EU's and euro zone's treaties and to national constitutions (Germany's included), and popular referendums would likely be unavoidable. I am not certain that organizing all this in every state of the EU is the best way to reassure markets; the process would generate heated debate and unpredictable outcomes amid a full-blown debt crisis. Meanwhile, a partial centralization of national debt liabilities—an idea that has also been floated in recent weeks—would risk sparking a panic on the non-centralized debt, which would only aggravate the wider crisis.

Given the slow pace of the reforms already in progress (such as extending the temporary European bailout fund, which was agreed upon back in March and six months later still hasn't happened), it's hard to see how euro bonds can be anything other than a long-term goal, if they are to be anything at all.

Fortunately, there is another solution to consider: a so-called European Monetary Fund linked to the European Central Bank. The fund's resources should total at least €2 trillion, and behave as a kind of super-stability fund—providing assistance to cash-strapped governments, based on strict conditions, and only in the case of liquidity crises.

The fund would have the advantage of not having to rely on state guarantees and contributions (which have had their malcontents, particularly in Germany) but would only have to obtain financing from the European Central Bank. Such a fund would not appear to require national referendums or modifications to Europe's existing treaties or national constitutions. The European Central Bank is today propping up Spain and Italy because it is the only one able to do so. A European Monetary Fund would allow the central bank to return to concentrating on its mission of maintaining price stability.

Euro-zone leaders are running out of time for concocting fanciful new ideas, such as the euro bond, that would not work in practice—at least not in any kind of timely fashion. It is essential the euro zone now rapidly put in place an effective, realistic plan to halt the crisis—before the markets say our time is up.

Mr. Marini is a French senator with the ruling Union for a Popular Movement party, and a senior member of the senate's finance commission.

http://online.wsj.com/article/SB10001424053111904194604576580492979479086.html

PARIS (Dow Jones)--French growth is coming under increasing pressure from the market turmoil that could force the government to cut its forecasts before setting its 2012 budget, a senior member of the Senate's finance commission and President Nicolas Sarkozy's UMP party said Tuesday.

On Friday, all eyes will be on the first reading of second-quarter French gross domestic product, which sets the tone for next year's budget. Analysts polled by Dow Jones Newswires expect quarterly French gross domestic product growth to slow to 0.3% in the second quarter from 0.9% in the first three months of the year.

That could raise questions about the government's 2.25% GDP forecast for next year.

"At the end of the summer break we should be ready to draw the conclusions from the bad health of financial markets because the fall of the stock market can have an impact on growth," Philippe Marini, a senior member of the Senate finance commission, said in a telephone interview.

Marini has previously called on the government to use a more prudent 2% growth forecast as it sets its 2012 budget. Following the market turmoil of the last few days, which has seen France's CAC-40 plunge to levels not seen since 2009, he said it may become necessary to use a 1.75% growth forecast.

Cutting growth forecasts would raise the pressure on Sarkozy with elections less than a year away in May 2012. In addition to denting household confidence as unemployment remains above 9%, such a move would oblige his government to carve out extra savings in order to meet its deficit-reduction targets.

And failing to meet the target of cutting the deficit to 4.6% of GDP in 2012 from a projected 5.7% this year could harm the country's credibility and threaten its triple-A rating.

France, the euro zone's second-largest economy, has already been in the market's sights this week after Standard & Poor's Corp stripped the U.S. of its triple-A rating, raising questions about other highly indebted sovereign nations.

At the end of July, the International Monetary Fund urged France to prepare contingency measures to meet its targets and warned the country cannot risk missing those targets given the need to keep its borrowing costs low by securing its top-notch rating. France already pays around EUR45 billion a year to service its debt.

If France's debt is downgraded it would cost several more billion euros a year, Marini said, adding that additional measures to keep France on track are a preferable option.

"The consequences in terms of financial charges of a downgrade of the French rating would be much more painful than making additional savings," he said. The French lawmaker says the government needs to look for a further EUR6 billion to EUR12 billion of savings for next year's budget, mainly from spending cuts and closing tax exemptions.

He stressed the importance of France's triple-A rating for the functioning of the euro zone's bailout mechanism, which uses the strongest guarantees from member states to keep its borrowing costs low.

"If ever France lost its triple-A it would be the entire euro zone that would be called into question. The European Financial Stability Facility would no longer be able to intervene in the same way to ensure financial stability," Marini said.

PARIS—The French government said it was ready to do whatever it takes to stick to its deficit-reduction plans, signaling its determination to remain among the six euro-zone nations still sporting a top-notch triple-A credit rating.

France "won't deviate one iota from its public-finance balancing plans," Budget Minister Valérie Pécresse told French radio Tuesday, as the cost of insuring the country's sovereign debt against default hovered around record levels.

Although much of the French government is on summer holiday, Ms. Pécresse and Finance Minister François Baroin have been speaking on French media since Friday's downgrade of U.S. debt, as they seek to ensure the euro zone's second-largest economy isn't swept up in a broad reassessment of the creditworthiness of highly indebted developed countries.

They have, however, stopped short of announcing new measures to boost French revenues in the event of a slowdown in growth. "If we need to make more efforts... we'll make more efforts," said Ms. Pécresse.

France's credit rating was thrust into the spotlight on Monday when the cost of insuring its debt against default jumped to a record, fueling speculation that its prized standing was at risk. Ratings firms, however, haven't given any indication that such a move is imminent, with Standard & Poor's Corp. offering strong vocal support for France's rating.

"The fundamentals can, of course, change… but for now we see clear space between the U.S. and the U.K. and France," said Mark Schofield, an analyst at Citigroup in a research note.

Credit-default insurance costs on France rose slightly Tuesday, though the yield on French 10-year government bonds fell, underscoring that Monday's jump was in large part a reaction to the U.S. downgrade.

Still, the focus on France's rating has upped the pressure on the euro zone's second-largest economy to strengthen its commitment to reaching its budget targets at a time when it is a key player in supporting euro-zone countries in bailout programs.

France stands out among the six triple-A-rated euro-zone countries for having the highest ratios of debt and deficit to GDP.

The country's budget gap shrunk to 7.1% of gross domestic product in 2010 from 7.5% the year before and the government is planning to cut it further this year to 5.7%, significantly higher than the 4.3% average in the euro zone. France has committed to slicing the deficit to 4.6% of GDP in 2012 before bringing it to 3% of GDP the following year.

It also predicts the debt-to-GDP ratio will peak at 86.9% in 2012. Next year, Mr. Baroin said, he is planning to close tax loopholes valued at €3 billion ($4.25 billion), and to continue a four-year-old policy of not replacing half of retiring civil servants.

At the end of July, the International Monetary Fund urged France to prepare contingency measures to meet its targets and warned the country can't risk missing them given the need to keep its borrowing costs low via its top-notch rating. France already pays about €45 billion a year to service its debt.

A one percentage point increase on France's €1.3 trillion of debt, which has an average maturity of 7 years and 38 days, would represent an additional yearly charge of between €12 billion and €15 billion, according to the Agence France Trésor.

Much of the focus will be on the growth trajectory. This week, the Bank of France said in its business-sentiment survey that GDP growth in the third quarter will remain at the 0.2% it forecast for the second quarter, undermining the government estimate of 2% for the year.

The first reading of GDP for the second quarter—which sets the tone for next year's budget—is due Friday. Analysts expect the data to show quarterly growth slowed to 0.3% from 0.9% in the first quarter.

Philippe Marini, a senior member of the French senate finance commission and of President Nicolas Sarkozy's party, said recent market turbulence may mean the government will have to cut its 2012 growth forecast to 1.75%.

That could have political implications for Mr. Sarkozy, with presidential elections less than a year away. In addition to denting household confidence as unemployment remains above 9%, such a move would oblige his government to carve out extra savings to meet deficit targets.

Mr. Marini says the government could find additional cutbacks of between €6 billion and €12 billion in next year's budget. "The consequences in terms of financial charges of a downgrade of the French rating would be much more painful than making the additional savings," he said.