The Polish EU Presidency has stated Tuesday it backs the initiative of German Chancellor Angela Merkel and French President Nicolas Sarkozy to forge new rules to secure the financial stability of the EU.

Poland, who is EU‘s rotational presiding member state until the end of 2012, will back all efforts to rescue the eurozone, said Polish PM Donald Tusk at a press conference in Warsaw.

“This can be done either by a new EU Treaty, which we favor, or by an intergovernmental agreement, which we view as less effective but quicker,” said Tusk.

According to the proposal, innovation may come either as amendments to the existing EU Treaties, or in a new agreement among the 17 member states of the eurozone.

The two key EU leaders agreed to propose automatic penalties for countries that exceed European deficit limits, as well as the creation of a monetary fund for Europe.

Merkel and Sarkozy also said they would prefer the treaty changes to be agreed upon by all 27 EU countries, but that they may consider a smaller number of countries to go ahead with the changes.

Amendments are expected to run along 4 main lines: stricter requirements for fiscal discipline to be embedded in amendments to EU Treaties; a boosting of the current bailout fund, the European Financial Stability Facility, to 2-3 times its current balance; a tranche of money from the IMF to augment the bailout fund; and a political mandate for the European Central Bank to keep buying debt from Italy and Spain.

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The EU member states showing a better fiscal discipline should be motivated with bonuses, Bulgarian Prime Minister Boyko Borisov proposed during a meeting with his Danish counterpart.

The block’s best performers in terms of fiscal stability could receive more EU funds during the next program period and could spend less on co-financing EU projects, the Bulgarian Prime Minister has proposed.

“What went wrong in the European cooperation is that not all countries abided by the rules,” Danish Prime Minister Helle Thoring-Schmidt stated during her meeting with Borisov on Monday, as cited by dnevnik.bg.

Thoring-Schmidt declared she was pleased with the fact that Bulgaria is keeping the rules and taking the right decisions despite not being among the richer EU countries.

Also on Monday, the Danish Prime Minister said that she firmly supported Bulgaria and Romania’s Schengen bids and hoped that the two countries would join the agreement during Denmark‘s EU presidency.

Denmark is working very actively in support of Bulgaria’s Schengen accession bid, according to Thoring-Schmidt.

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Denmark firmly supports Bulgaria and Romania‘s Schengen bids and hopes that the two countries would join the agreement during its EU presidency, Danish PM Helle Thorning-Schmidt has said.

“Bulgaria and Romania have met the requirements for joining the Schengen Agreement; we should stimulate them by accepting them in Schengen. If someone has abided by the rules, they should proceed to the next level,” Thorning-Schmidt has declared, as cited by the Bulgarian BGNES news agency.

Denmark is working very actively in support of Bulgaria‘s Schengen accession bid, according to the Danish Prime Minister.

On Monday, Thorning-Schmidt met with her Bulgarian counterpart Boyko Borisov in the Balkan country’s capital Sofia.

The Netherlands remains the last Schengen state to strictly oppose Bulgaria‘s phased-in accession to the agreement after Finland softened its position in mid-November. Finland now says it would accept a phased-in solution for the Balkan country if it sees a positive Cooperation and Verification Mechanism interim report at the beginning of 2012.

Bulgaria and Romania were initially planned to join the Schengen Area in the spring of 2011, but their entry was opposed by France and Germany, which also voiced objections relating not to technical criteria, but rather to corruption and organized crime.

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The fact that some EU countries still impose restrictions on access to their labor market for Bulgarian citizens means only one thing: that these people will spend more time there working illegally.

The conclusion is part of the “Bulgarian Labor Migration: Do Restrictions Make Sense” report of the Open Society Institute – Sofia published by Capital daily on Monday.

The study conducted by OSI–Sofia indicates that Spain, Germany, Italy, Greece and the United Kingdom have been the main recipient countries for Bulgarian emigrants in the European Union over the past 10–15 years.

The list of the most popular destinations for migrant workers from Bulgaria includes countries which lifted labor restrictions in 2007, like Spain, as well as others, like Germany, which will keep the limitations in force for the maximum possible period, until 2014.

According to the survey, there has been no difference in the flow of Bulgarian migrants to Spain and Germany after Bulgaria’s accession to the EU on January 1, 2007.

The report of the Sofia-based think tank suggests that the appeal of emigration has been gradually declining for Bulgarians due to the fact that its unemployment rate is now comparable to Western European levels.

At the same time, OSI-Sofia notes that differences in income have decreased: in the 1990s per capita income in Western Europe was 4 times higher than that in Bulgaria, while one decade later this ratio is 2.5 measured by purchasing power parity.

The study identifies hotel and tourism, domestic work, care serv­ices, construction and trade as the main employment sectors for Bulgarian labor emi­grants.

The think-tank also notes that 2009 interviews with Bulgarian workers in the United Kingdom highlight agriculture as another important start-up sector.

OSI-Sofia also compares statistics on remit­tances received in Bulgaria,EUR 596.8 M, and FDI data, EUR 534.5 M, as recorded by the Bulgarian National Bank (BNB) for the period January-September.

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Bulgaria, the poorest EU member state, is said to feel cheated as the EU institutions are about to seal a new policy allowing six other member states, which are struggling financially, to be able to co-fund projects with much less money.

“Countries which maintain a strict financial discipline should not be punished and those that do not maintain the discipline should not be rewarded,” said a senior Bulgarian diplomat, as quoted by EurActiv.

“We are not in a position to block this legislation,” he added a day after the European Parliament voted in favor of the new proposal, stressing that Bulgaria will keep its position “in principle”

EurActiv reminds that the European Commission proposed last summer to increase the EU co-financing in cohesion, fisheries and rural development policies for countries that have received financial assistance under the balance of payments support mechanism – Romania, Latvia and Hungary- or under the European Financial Stability Facility – Greece, Ireland and Portugal.

This does not offer the six countries more money, but it enables them to “actually implement” some EU projects that would otherwise never be put in place, because of the inability of the countries to provide the remaining funds needed in the co-financing process.

In practice, Brussels has increased its co-financing rate by 10 percentage points.

For example, the EC will provide a maximum of 95% project financing in the case of Greece – from a previous 78% .

The Greek government would not need to provide the 15% usually requested to member states, but only up to 5% of the cost of a project.

In Ireland, the co-financing rate of the EU was only 50% and it will increase until a maximum of 60%, given its regions are richer and more competitive already.

According to an EU source, the deal that will be officially agreed between the ministers from all EU countries has already been struck and little if any is expected to change by 12 December.

“A change of the situation is not envisaged soon, but Bulgaria keeps its position also for the next multi-annual financial framework and for the future,” the diplomat added.

Bulgaria criticized the move as it did not understand why those countries which did spend the allocated EU funds were “punished” by not being offered the 95% co-financing alternative.

“EU funds are seen as a gold mine by new entrants in the EU, such as Romania and Bulgaria, according to EU sources. Despite the potential lying under the “mountain of money”, as a Romanian saying would put it, Romania continues to have the lowest fund absorption rate in the EU,” states EurActiv in its article.

“In some member states it was hard for countries to get projects done because there was a liquidity problem,” an EU official is quoted as saying.

Although Bulgaria is the poorest EU country, it is excluded from the beneficiaries because its macroeconomic indicators are stable.

Commenting on the adoption of the law by the EP, president of the European Commission, José Manuel Barroso said:

“Today we have taken an important step on the path to European recovery. I am glad that the Parliament acted so quickly and agreed to our proposal. This measure is Europe’s expression of solidarity with and support for Member States implementing painful economic adjustment programmes. They currently do not have much space for investing in growth and jobs. Our measure will inject into those economies funding essential for boosting their competitiveness and employment.”

Bulgarian daily Dnevnik quoted Prime Minister Boyko Borisov as saying that he is strongly against any support given to the bailout countries by reducing the ratio of national financing for EU-sponsored projects.

To the contrary, those who needed to be stimulated are those who respect the financial discipline, Borissov said. “If this ratio is to be lowered, then it should be lowered for all countries.”

MEP Danuta Huebner (EPP, Poland), rapporteur and Regional Development Committee chair, said that “the Parliament wants this derogation to apply as soon as possible”.

“Swift actions to help those hit hard by the crisis have been our priority. A temporary rise in co-financing ceilings will not affect total EU regional funding in the Member States but will allow funds to be concentrated on completing some projects and thus reduce the pressure on national budgets,” Huebner said.

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Bulgaria has done a wonderful job in meeting Schengen criteria and must join the free movement area as soon as possible, stated Luxembourg PM Jean-Claude Juncker, who is on a visit to Bulgaria Wednesday.

In Varna, Juncker met his Bulgarian counterpart Boyko Borisov to discuss Bulgaria’s perspectives as an EU member, as well as bilateral relations.

“Bulgaria has made tremendous efforts so that Schengen external borders are well defended and it is high time that other members reward those efforts,” stated the Luxembourgeois PM Wednesday.

Jean-Claude Juncker, who is in addition president of the Eurozone, also highly commended the Bulgarian government for its policies in the field of finance.

“Public finances in Bulgaria are managed in a way that has rendered the country far better off than some Eurozone members,” commented Juncker.

Bulgaria and neighbor Romania’s hopes of joining Schengen as scheduled in the spring of this year were dashed by members such as Germany, France and the Netherlands.

They voiced worries related to levels of corruption and organized crime in the two countries, which in essence are informal and have nothing to do with the strict criteria for Schengen accession, but have nevertheless proved a decisive obstacle.

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The governments of Bulgaria and neighboring Romania have asked the European Commission to help convince older member states to lift restrictions for job-seekers from the two countries as of 2012.

Bulgarian Labor Minister Totyu Mladenov and his Romanian counterpart Sebastian Lazaroiu have sent to this end a joint letter to Employment, Social Affairs and Inclusion Commissioner László Andor.

In the joint letter, the two ministers call on the European Commission to issue a report on the free movement of workers from their countries, which could serve as a basis for decision-making prior to the scheduled review of the restrictions at the end of this year.

“We strongly believe that such a report would help member states which still uphold restrictions on their labour market for Bulgarian and Romanian nationals to take a positive decision for the restrictions to be lifted,” reads the letter.

“We believe that the free movement of workers must become a reality and that transitional measures should be removed at least two reasons: the free movement of workers is a fundamental right in the EU and the types of migration from new member states do not justify these measures,” the ministers point out.

Romania and Bulgaria are in the second phase of the restrictions placed on the labor market commonly referred to in EU circles as the “2+3+2-year arrangement”. The second phase ends on 31 December 2011.

Ten member states have kept job restrictions for the citizens of the two Balkan countries that joined the EU in 2007.

The restrictions can be kept for another two years, until 2013, if the countries present evidence to back up their claims that the Bulgarian and Romanian job-seekers are a burden for their labor markets.

The UK, Germany and Austria have also retained labour market restrictions for citizens of Bulgaria and Romania despite a recommendation from the European Commission that they be lifted.

Bulgarians and Romanians are also required to secure a work permit in order to take up a job in Ireland and Belgium.

The other EU-25 Member States that have notified the Commission of their decision to continue to apply national law on labour market access after 1 January 2009 include Italy, France, Luxembourg, Malta and the Netherlands.

The presence of eastern European workers is extremely sensitive in Austria and Germany, which border the poorer region and the situation became even worse when recession started to boost unemployment rate.

The European Commission and the European Parliament can only recommend to the member states to open their labor markets for Bulgarians and Romanians, but it is up to the countries themselves to take the final decision.

It is doubtful however whether the joint efforts of the Bulgarian and Romanian governments will yield the expected results.

Earlier this year Austrian Labor Minister Rudolph Hundstorfer forecast that ten major EU member states will keep their labor markets closed for citizens of Bulgaria and Romania till 2014, the maximum period they are allowed.

This means that the ten Western European countries in question will wait until the end of the so called transition period of two-plus-three-plus-two – or up to seven – years after Bulgaria and Romania‘s EU accession in 2007 to open their labor market for Bulgarians and Romanians.

While Hundstorfer did not name the EU member states in question, it was obvious that he meant the ten countries still having restrictions: Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, Malta, the Netherlands, and the UK.

According to the Austrian Minister‘s forecast, these countries will keep the labor restrictions on Bulgarians and Romanians as long as they are legally allowed to by EU rules.

The European Parliament has adopted Thursday a resolution opposing the facilitation of border control reintroduction within the Schengen free movement area.

“The influx of migrants and asylum seekers cannot justify reintroducing border controls in Schengen,” says the resolution, adopted by a wide majority stating “strong and firm opposition” to such measures.

Member states such as France, Italy and Denmark have requested that Schengen rules be modified as a response to increased incoming of refugees from troubled North Africa.

Internal affairs Commissioner Cecilia Malmstrom has stated the European Commission might consider implementing such measures.

The EP resolution adopted Thurday is non binding for the European Council and the EC, but will have political weight as expressing the opinion of European legislators.

The resolution further asks the EC to present an initiative aimed at defining the “strict application” of the current rules by the Member States, insisting that any such changes will not work to reinforce the freedom of movement of European citizens.

The EP document further recalls that there is an already exisiting mechanism for introduction of border controls for exceptional cases, and argues it is sufficient for the needs of member states.

What is more, MEPs express the desire for the introduction of a “Community-oriented evaluation system” for the introduction of border controls or modifications of the Schengen system, instead of the intergovernmental method at place now.

The declaration goes on to argue that the initiative by France and Italy is “rooted in a reluctance to implement common European policies in other fields”, most crucially a common European asylum and migration system.

It further calls for solidarity among member states in dealing with the migrant influx, arguing that EU members should help each other in extraordinary situations.

Following European Commission President Jose Manuel Barroso, European Central Bank President Jean-Claude Trichet has voiced sharp criticism of financial rating agencies.

Thursday Trichet spoke about the existence of a “structure of international credit agencies similar to an oligopoly,” describing it as “highly undesirable.”

What provoked the unusually sharp criticism was the Tuesday downgrading of Portugal‘s debt rating to “junk” on the part of Moody’s, something that also provoked the ire of EC President Barroso.

Wednesday Barroso said the timing of the downgrade was “questionable” and raised the issue of the “appropriateness of behaviour” of the agencies in general, reported the BBC.

A Commission statement further characterized Moody’s move as “an unfortunate speculation.”

National leaders have also reacted to the events, with German Minister of Finance Wolfgang Schaeuble calling for limiting the influence of agencies on global financial life.

On his part, Greek Minister of Foreign Affairs Stavros Lambrinidis, whose country is also suffering severe financial troubles, described the downgrading of Portugal‘s ratings as “madness” that could lead to a “self-fulfilling prophecy.”

Bulgaria is a responsible manager of funds from the common EU budget and is in a good position to prove that to the EU, stated Bulgarian Minister of EU Funds Tomoslav Dochev.

“Bulgaria is showing it can and it knows what it’s doing. Our country is in a better position than ever,” said Donchev in an interview for the Bulgarian National Radio Saturda.

In particular, he stressed that during the last two years or so corruption in European fund absorption in Bulgaria has largely been eliminated.

Minister Donchev also said that Bulgaria will request that money for funds for the next EU programming period be not tied to the level of absorption for the current one.

He was confident that Bulgaria will continue registering ever greater rates of absorption in the future.

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