Study Details Graft in European Union

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Fiat, in Deal With Union, Will Buy Rest of Chrysler

Fiat said on Wednesday that it had reached an agreement to take full ownership of Chrysler in a $4.35 billion deal with the United Automobile Workers retiree health care fund.

Fiat and the U.A.W. trust have shared ownership since Chrysler emerged from bankruptcy in 2009. The deal to buy out the trust’s 41 percent stake will make Fiat the world’s seventh-largest automaker.

“The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how — a solid and open organization that will ensure all employees a challenging and rewarding environment,” Sergio Marchionne, chief executive of Fiat and chairman and chief executive of Chrysler Group, said in a statement Wednesday.

The agreement, which is expected to close on Jan. 20, will allow the carmaker and the union to end months of negotiations over the value of the U.A.W.’s stake. Union leadership had been pressing to force a public stock offering to cash out its shares on the open market amid arbitration in a Delaware court over the value of the trust’s stake.

Mr. Marchionne, who became Fiat’s chief executive in 2004, has been clear about his ambitions to create a company with a global scale to challenge the world’s leading automakers: General Motors, Volkswagen and Toyota. Fiat has held the majority stake in Chrysler since 2009 and has made no secret about wanting to acquire the remaining stake.

Fiat will pay the trust $1.75 billion in cash, and Chrysler will make a $1.9 billion contribution. Chrysler also agreed to pay the trust $700 million over four annual installments once the sale closes.

U.A.W. officials did not comment on the deal on Wednesday.

The merger will help both companies operate with a single set of financial statements, said Jack R. Nerad, the executive editorial director at Kelley Blue Book. “Their ability to move capital around is going to be a big advantage for them,” Mr. Nerad said.

The deal that awarded Fiat a 58.5 percent stake in Chrysler and the remainder to the union’s voluntary employee benefits association was a cornerstone of the Obama administration’s restructuring of the American auto industry in the recession.

“I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009,” said John Elkann, chairman of Fiat.

The agreement to pay $1.75 billion to the U.A.W. means that Fiat will have paid a total $3.7 billion to acquire Chrysler, much less than the $36 billion Daimler-Benz paid for the company in 1998 or the $7.4 billion Cerberus Capital Management paid to acquire an 80 percent stake in 2007.

Chrysler’s sales have soared recently with the success of new models including the Jeep Grand Cherokee, Ram pickup truck and Dodge Dart compact car. The company reported a quarterly profit during the first quarter of 2011 for the first time in five years, and repaid its government loans early.

Chrysler’s overall sales in the United States rose 9.3 percent through the first 11 months of the year, as the Fiat brand, still a fledgling here, fell 1.4 percent. The Ram brand has been a bright spot for the company, with sales rising 22.9 percent through November. The Ram pickup truck is the fourth-best-selling vehicle in the United States.

Together, Fiat and Chrysler sold 4.5 million vehicles globally in 2012, according to OICA, an international organization of vehicle manufacturers. Toyota is the world’s largest automaker, having sold 10 million vehicles, followed by General Motors, Volkswagen, Nissan-Renault, Hyundai and Ford. The merger will put Fiat and Chrysler just above Honda in size.  

Though Chrysler and Fiat have shared for years such resources as product development teams, and such production assets as single platforms that can be used to build several models, consolidated ownership will allow the company to move forward more smoothly, Mr. Nerad said.

The geographic diversity in the markets covered by Chrysler and Fiat will be a boon to the merger, he added.

“Often, one global market will be up while another’s down,” he said. “If you’re stuck in a single region, it can be a disadvantage to compete against global players.”

This article has been revised to reflect the following correction:

Correction: January 2, 2014

An earlier version of this article misstated the company that bought Chrysler in 1998. It was Daimler-Benz, not Daimler-Chrysler.

Administration Rejects Union Pleas on Health Law

The decision, likely to infuriate some of Mr. Obama’s closest political allies, denies federal tax credits to workers who receive health coverage under employee benefit plans sponsored by more than one employer. Such plans are common in construction and other industries.

Under the 2010 health care law, the tax credits will be available starting next year to low- and moderate-income people who buy private insurance in state-based marketplaces known as exchanges. The administration’s decision was made by the Treasury Department, but almost surely approved by the president.

The Treasury said its conclusion resulted from a straightforward reading of the 2010 health care law, which says that workers are not eligible for premium tax credits if they have been offered affordable coverage under an employer-sponsored plan that provides minimum value.

“An individual who is covered by an eligible employer-sponsored plan would not be eligible to receive a premium tax credit,” the Treasury said in a letter to Congress.

The Obama administration said that workers covered by multiemployer plans already received a substantial tax benefit. Their coverage is typically financed by contributions from employers, and, like most other employer-provided coverage, these contributions are not counted as taxable income to the employees, the administration said.

The Treasury letter was sent Friday to Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, and Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee.

They had warned the administration on Tuesday not to “provide a special exemption to unions at the expense of American taxpayers.”

In a joint statement on Friday night, Mr. Camp and Mr. Hatch said: “There has been far too much special treatment for politically favored friends of Obamacare. When it comes to employers and taxpayers picking up the health care tab for labor unions — it appears that is a price that is simply too high. Perhaps even this administration recognizes that there are limits to them stretching the law to reward their friends.”

Labor leaders criticized the health care law at a convention of the A.F.L.-C.I.O. in Los Angeles this week. They said the law could destabilize the employer-based system of health insurance and encourage some companies to dump workers into the newly created health insurance exchanges. Richard Trumka, the president of the A.F.L.-C.I.O., had conveyed those concerns directly to Mr. Obama and other White House officials.

In a letter to the top Democrats in Congress in July, James P. Hoffa, president of the Teamsters, and two other union presidents said that perverse incentives in the Affordable Care Act were “already creating nightmare scenarios.” They said that “numerous employers have begun to cut workers’ hours” to avoid the cost of providing them health benefits.

And the labor leaders said that multiemployer health plans should be eligible for tax credits, just as commercial insurance companies will be able to receive such credits to help pay premiums of low- and moderate-income people.

Union leaders said they were particularly annoyed that Mr. Obama had denied their request while granting relief sought by employers. The administration delayed by one year, to 2015, a requirement for larger employers to offer coverage to full-time employees.

VW and Its Workers Explore a Union at a Tennessee Plant

The company would be the first German automaker to have such a council at a United States plant. A works council is a group of employees, including both white- and blue-collar workers, that meets with management on issues like working conditions and productivity.

But to avoid violating American labor laws, the plant would first have to be formally unionized, the company said.

“VW workers in Chattanooga have the unique opportunity to introduce this new model of labor relations to the United States, in partnership with the U.A.W.,” the union’s president, Bob King, said in a statement on Friday.

Volkswagen officials told employees at the Chattanooga plant on Thursday that it was negotiating with the union about establishing a works council there, where about 2,000 workers assemble the VW Passat. A letter, signed by the plant’s chairman, Frank Fischer, and its vice president for human resources, Sebastian Patta, said the talks were aimed at “the possibility of implementing an innovative model of employee representation for all employees.”

The VW officials said that a works council could be created at a company in the United States only with the cooperation of a labor union because it might otherwise be viewed as an illegal company-sponsored union. That, the VW officials wrote, is why the company has started its dialogue with the U.A.W. None of the foreign carmakers with auto plants in the South are currently unionized.

Gov. Bill Haslam of Tennessee has been outspoken in opposing any union inroads at the Volkswagen plant, warning that it would undermine his state’s efforts to attract investment.

Volkswagen and U.A.W. officials met on Aug. 30 in Wolfsburg, Germany, where the company is based, to continue previous discussions about the works council and unionizing at the Chattanooga plant, which has been operating since 2011 and has a total of 2,500 employees including managers.

Some labor and auto experts say that if the VW plant in Chattanooga gets a works council, it would create pressure to do likewise at the BMW plant in Spartanburg, S.C., and the Mercedes-Benz plant in Vance, Ala.

While some executives see works councils as a pesky thorn in their side, others see them as a useful source of ideas from the shop floor and a vehicle to build consensus and employee morale.

“Volkswagen is a company that has extensive experience with union representation,” Mr. King said in his statement, “and the U.A.W. believes the role of the union in the 21st century is to create an environment where both the company and workers succeed.”

U.A.W. officials say that Volkswagen has agreed to not oppose any unionization drive in Chattanooga.

In the letter to Chattanooga employees, Mr. Fischer and Mr. Patta wrote that they wanted to “prevent any influence from outside driving a wedge into our great team.”

That resembles language that anti-union companies often use to suggest that unions would be an undesirable third party that gets between employees and managers. But a U.A.W. official said that sentence referred to anti-union groups, like the Competitive Enterprise Institute and its Center for Economic Freedom, that have vigorously criticized Volkswagen for not battling to keep out a union the way that many American companies do.

In Germany, Union Culture Clashes With Amazon’s Labor Practices

But across the Atlantic — nein, non, no.

Even as President Obama spoke about middle-class jobs last week at an Amazon warehouse in Tennessee, Amazon was facing strikes at warehouses in Germany, its second-biggest market. Unions there say the company has imported American-style business practices — in particular, an antipathy to organized labor — that stand at odds with European norms.

“In Germany, the idea that warehouse workers are going to be getting opposition from an employer when it comes to the right to organize, that’s virtually unheard-of,” said Marcus Courtney, a technology and communications department head at Uni Global Union, a federation of trade unions based in Nyon, Switzerland. “It puts Amazon out in left field.”

Amazon is hardly out there alone, however. Large American technology companies are increasingly running into obstacles as they expand in Europe. For Facebook and Google, the running issue is privacy. Google was fined this year by German authorities for illegally collecting personal data while creating its Street View mapping service, after facing minimal sanctions over Street View at home. Meanwhile, European privacy regulators are considering tough regulations to protect consumers on the Internet, a direct challenge to Google, Facebook and other online companies that mine personal data.

Antitrust officials in Europe are scrutinizing Apple’s relationships with wireless carriers, as well as Google’s competitive practices. And Google, Apple and Amazon have all been criticized by European lawmakers for tactics that help them minimize their tax bills.

Amazon has been criticized for its working conditions in the United States — but not nearly to the same extent as in Europe. On the surface, Amazon’s labor problems in Germany revolve around wages.

The union says workers in warehouses in two small German cities are properly classified as retail employees, and should be paid at the higher rate required for people who work in department stores and other retail outlets. Amazon says they are more properly classified as warehouse workers, and paid at a lower rate.

The subtext, though, is Amazon’s opposition to unions in its warehouses as a general principle, because the company fears unions will slow down the kind of behind-the-scenes innovation that has propelled its growth.

Dave Clark, the company’s vice president of worldwide operations and customer service, says Amazon views unions as intermediaries that will want to have a say on everything from employee scheduling to changes in processes for handling and packaging orders. Amazon prizes its ability to quickly introduce changes like these into its warehouses to improve the experience of its customers, he said.

Last year, the company spent $775 million to buy a manufacturer of robots that it plans to eventually deploy in its warehouses, though it has not said when they would come to Germany. The last thing it wants is to have to get approval from unions for such changes.

“This really isn’t about higher wages,” Mr. Clark said. “It isn’t a cost question for us. It’s about what our relationship is with our people.”

“We’re still a developing industry,” he added — despite the fact that Amazon posted revenue of $15.7 billion in the last quarter and the company is enjoying a buoyant stock price.

In the United States, Amazon successfully thwarted efforts to unionize. Over a decade ago, Mr. Courtney of Uni Global led an unsuccessful effort in the company’s home state of Washington to organize Amazon’s customer service representatives.

Two years ago, an investigative article by The Morning Call newspaper in Pennsylvania’s Lehigh Valley chronicled poor working conditions in an Amazon warehouse in the state, including instances where it stationed paramedics outside to take heat-stressed workers to the emergency room. Amazon says it has addressed the problem by installing air-conditioning in all of its facilities.

More recently, a firm that provides temporary employees for Amazon warehouses is defending itself in a class-action suit that claims the firm shortchanged workers on pay as they waited in security lines to exit warehouses.

Jonathan Barnes, a spokesman for the staffing firm named in the suit, Integrity Staffing Solutions, declined to comment.

But it is a different story in Germany, where the powerful labor movement behind the Amazon strikes traces its roots back more than two centuries.

Mr. Courtney, the Swiss-based head of the federation of trade unions, said other American tech giants, including I.B.M. and Hewlett-Packard, have been more tolerant than Amazon of unions in their European operations.

And the strikes in Germany raise especially knotty problems for the company, which has ambitious expansion plans there.

European Union Offers Berlin Compromise on Bank Proposal

Speaking in London, Michel Barnier, the European Union’s commissioner overseeing financial services, said there was “room for maneuver in the negotiation,” and tried to head off criticism from Germany that the European Commission, the executive arm of the 28-nation bloc, was using the proposal to make a power grab.

“I don’t have any ideology in the issue,” Mr. Barnier said. “It’s not that the Commission wants to have a big role in the resolution process — if someone would find and suggest to us a better solution we would be happy to look at it.”

The resolution fund is one pillar of the proposed banking union that policy makers see as an important part of the response to the financial crisis that has gripped the euro zone.

One question, Mr. Barnier said, was, “Should we be treating banks that are purely regional and have no cross-border activities in exactly the same way as big international banks?”

“That’s something that we can maybe look at further in the course of negotiations,” he added. Germany, whose approval will be needed for the resolution mechanism, has more than 400 local savings banks, which are economically and politically important.

Under Mr. Barnier’s plans, outlined Wednesday, the European Central Bank would signal when a lender in the euro zone, or in a country participating in the banking union, was in severe financial difficulties. With representatives of national authorities, the E.C.B. and the Commission, a board would undertake preparatory work before the Commission would then decide whether and when to place a bank into resolution.

That idea provoked immediate opposition from Berlin, and more evidence of discord in Germany surfaced Friday in a letter to Mr. Barnier from Finance Minister Wolfgang Schäuble. “The proposal published by the Commission regrettably envisages too high a degree of centralization with regard to the boundaries” of the existing E.U. law, the letter said, according to Reuters.

“The proposal does not match the current legal, political and economic realities and would create major risks,” Mr. Schäuble wrote, adding that the transfer of powers to the Commission was not backed by E.U. treaties.

Mr. Barnier disputed that, arguing that his proposal was the best solution available without changing E.U. treaties. He said that if the treaties were amended, the European Stability Mechanism, the euro zone’s permanent bailout fund, might take over the power to decide when to wind down banks.

One E.U. official, speaking on condition of anonymity owing to the sensitivity of the issue, said that agreement with national governments on the resolution fund was possible by the end of the year — but conceded that changes would likely be made. Most officials expect the role of the Commission to be pared back, but for legal reasons there are few alternative bodies that could make the decision to wind down a bank, they say.

In his speech in London on Friday, Mr. Barnier also warned against any effort by Britain to win special exemptions from E.U. single market rules for its financial services sector, the City of London.

“By definition,” he said, “there can’t be two single markets: one for financial services and one for the rest of the economy. One for the City, and one for the rest of the E.U.

“Repatriating full policy responsibility for financial services would mean leaving the single market as a whole and de facto the E.U.,” Mr. Barnier said, adding: “I believe the U.K. would lose out on many of its own interests if it chose that path.”

Prime Minister David Cameron has promised to renegotiate British ties with the European Union and some lawmakers from his Conservative party have called for new powers that would prevent Britain being outvoted on any new legislation on financial services.

But Mr. Barnier rejected that idea.

“It would not work,” he said. “If you give a veto to one country you have to give it to others and then we no longer have an internal market,” he said. “Our interest is in having a coherent single market with intelligent rules that apply everywhere.”

European Union Proposes Plan for Failing Banks

BRUSSELS — European Union officials announced an ambitious proposal on Wednesday for a uniform way to deal with failing banks in the region that would include central decision-making and an emergency fund raised from Europe’s banks.

The plan is meant to reduce the chances that struggling governments end up taking their states deeper into debt to save their banking systems, only to face high sovereign borrowing costs that would threaten the stability of the euro currency union.

“We cannot eliminate the risk of future bank failures,” José Manuel Barroso, the president of the European Commission, said in a statement. But the proposal, he said, helps ensure that “it should be banks themselves — and not European taxpayers — who should shoulder the burden of losses in the future.”

The commission, the European Union’s executive body, would assume significant new power under the system, something that makes some countries, including Germany, skeptical. The plan would require approval by a majority of European Union governments and by the European Parliament before it could go into effect.

To be sure, there would be limits to the power of the new centralized system. It could not, for example, order the closure of a bank without permission of the host government if doing so would result in that country’s taxpayers footing some of the bill. And the system would not have access to full amount of the emergency fund for more than a decade.

Even so, analysts have described the plan as one of the most significant transfers of national sovereignty to Brussels yet proposed in the name of securing the euro. The concern of Germany and other countries about giving such authority to the European Commission could bog the proposal down in months of difficult negotiations.

The proposed bank-failure program, known as the Single Resolution Mechanism, was conceived as part of a broader European banking union whose other provisions would include a single banking supervisor and an agreement to impose any losses mainly on a bank’s creditors and shareholders, rather than taxpayers.

The Single Resolution Mechanism would rely on the European Central Bank to signal when a financial institution in the euro area was facing severe difficulties.

A resolution board, supported by a staff of around 300 and made up of representatives from the central bank, the European Commission and member states of the union, would then make a recommendation on how to shut down or shrink a bank. The commission would reserve the right to make a final decision.

The board also could draw on the shared fund to help shut down or radically restructure failing lenders after creditors and shareholders have borne some losses. European Union officials want the size of the fund to be about 70 billion euros by the time it is fully financed by 2025, with money coming from levies on banks.

But the slow buildup of the fund could mean that if bank crises arise in the interim, the new system would be reliant on national funds, and possibly even public money from other euro zone countries. Tapping taxpayer money to bail out other countries’ banks is something that Germany has consented to, but only as a last resort.

On Tuesday, Wolfgang Schäuble, the German finance minister, insisted, as he has before, that changes to European Union treaties would be necessary before the Single Resolution Mechanism could go fully into force. Because treaty changes would be laborious and far from certain, Mr. Schäuble is essentially arguing for a potentially long delay to the banking effort.

But France has called for swift adoption of the plan.

During a news conference on Wednesday to present the plan, Michel Barnier, the European commissioner overseeing financial services, sought to underline the need for rules ensuring the stability of European banks, saying that the sector drove investment in a far larger proportion of the region’s economy than is the case in the United States.

“We’re not going to get diverted by lobbying,” Mr. Barnier said.

China Divides European Union in Fight Over Tariffs

HONG KONG — Adroitly alternating the threat of a trade war with the lure of its huge import market, China appears to have driven a deep wedge between Germany and the rest of the European Union. And it may even have caused a rift within the German business world.

As Chinese and European trade officials stare each other down over next week’s scheduled imposition of big tariffs on the $27 billion worth of solar panels China sells to Europe each year, Germany has come down on China’s side.

Notably, Berlin is backing Beijing, even though Europe’s biggest producer of solar equipment, SolarWorld, is a German company that desperately wants the European Union to impose tariffs on the Chinese equipment. Unless the bloc backs off under German pressure, tariffs of up to 50 percent would go into effect June 5, to punish China for the ostensible “dumping” of solar panels at below cost in Europe.

“Europe cannot succumb to blackmail — dumping is illegal, and the E.U. is obliged to defend itself by applying the international trade law,” said Milan Nitzschke, a spokesman for SolarWorld and the president of ProSun, a lobbying group for the European solar energy industry.

But many other German companies, which rely more heavily than other European manufacturers on China as a significant market for their exports — whether Volkswagen cars or Siemens factory equipment or various other goods — fear that the dispute over solar panels could lead to an all-out trade war with China, which would be disastrous for their businesses. So far, the German government appears to agree.

And little wonder. Germany is China’s most important trading partner in Europe and China is Germany’s leading partner in Asia. The Federation of German Industry estimates that one million German jobs are dependent on exports to China. Of those, the German solar industry has about 99,000.

For half a century, Germany has been one of the most loyal and enthusiastic supporters of European unity. And since the advent of the European Union in 1992, Berlin has advocated giving Brussels greater scope in the range of issues it handles. But the solar tariff showdown illustrates the way domestic priorities can sometimes trump pan-European loyalties.

Chancellor Angela Merkel of Germany played host last weekend to Prime Minister Li Keqiang of China. More than a dozen trade agreements were signed, including between VW, Siemens, BASF and their Chinese partners, all supporting further expansion for German industry in the Chinese market and further investment by the Chinese in Germany. Special privileges that China offered German companies in its agricultural and recycling industries were clearly aimed at trying to win Berlin’s support.

After her meeting with Mr. Li, Ms. Merkel told reporters on Sunday that her government would lobby against the solar tariffs, saying the situation was “rather complicated.”

“Germany will do everything possible to resolve the conflicts that we have in trade,” Ms. Merkel said, “through as many discussions as possible to prevent it from falling into a sort of conflict that ends in the raising of tariffs from both sides.”

Germany’s economics minister, Philipp Rösler, said Monday that Germany had told the European Commission in Brussels that it was voting against the imposition of preliminary tariffs on Chinese solar panels. While the commission routinely consults member countries on preliminary tariffs, in the past that has tended to be more of a formality, and opposition has been infrequent.

But on Tuesday, a trade official in Europe with direct knowledge of the matter said it appeared that a majority of the governments were officially opposed to preliminary tariffs on Chinese solar imports. And yet, the European commissioner for trade, Karel De Gucht, could still go ahead on June 5 and impose the preliminary duties without any further approvals. That deadline was established at the opening of the commission’s investigation in September.

Whether Mr. De Gucht proceeds with the preliminary duties remains to be seen. But he “will not be intimidated in any way” and “will not bend to external pressure,” Mr. De Gucht’s spokesman, John Clancy, said at the commission’s daily news conference Tuesday.

Preliminary tariffs, which would last six months, in the past have tended to be imposed as a negotiating ploy before the European Commission decides whether to impose so-called final tariffs that last for five years. A voting majority of member nations could overturn the preliminary tariffs, although such a move would be unprecedented.

Melissa Eddy reported from Berlin. James Kanter contributed reporting from Brussels and Chris Buckley from Hong Kong.

European Union Leaders Meet on Tax Avoidance

It was the first time that Austria, long considered a tax haven for the wealthy, agreed to a deadline for disclosing such information after rebuffing calls for greater transparency for a decade. The country said it expected to reach an agreement in principle on the matter by the end of the year.

That news, at a summit meeting of European leaders here, upstaged a separate but related topic that has dominated headlines this week: tax-reduction strategies by big multinational companies like Apple, which Congressional investigators in Washington say slashed its tax bill by setting up companies in Ireland.

Pressure on Austria has grown more intense as European countries try to curb citizens’ ability to stash money in other jurisdictions, shortchanging their home governments of tax revenue during a time of lean budgets and gaping deficits.

Ferreting out hidden bank accounts has become a cause célèbre in many countries, especially Greece, which has jailed hundreds of people suspected of tax delinquency, including former government officials. In France, Jérôme Cahuzac, a French minister responsible for fighting tax evasion, resigned upon admitting, after weeks of denials, that he had held a secret bank account in Switzerland.

The 27-member union estimates that tax avoidance costs governments there a total of $1.3 trillion a year.

The crackdown on bank secrecy in Europe is also a result of American demands for fuller cross-border sharing of information under the Foreign Account Tax Compliance Act.

“We will act jointly, and I believe we will manage the exchange of data by the end of the year,” the Austrian chancellor, Werner Faymann, said at the meeting here.

Mr. Faymann said it was a “bad day for tax cheats.” But he stressed that Austria’s concessions were contingent on the “negotiations with third countries” like Switzerland. Austrian officials say that without overhauls in those other jurisdictions, financial services industries in the European Union would be at a competitive disadvantage.

The European leaders, who met for four hours on Wednesday, also directed the European Commission to negotiate tougher agreements with five countries: Switzerland, Andorra, San Marino, Monaco and Liechtenstein.

The chances of the other countries agreeing quickly are not great. And bloc officials warned that those countries could turn the tables by asking the union to make changes first, risking a standoff.

But those countries are also being pressed by the United States for details of all accounts held by American taxpayers. Under that pressure, they may decide there is not much point in digging in their heels with the European Union.

Those negotiations might also clear the way for action by Luxembourg, a bloc member that agreed last month to share banking data by January 2015. But it is still awaiting the outcome of talks with the Swiss before deciding whether to expand the information exchange agreement to include investments like trusts and foundations, as Austria has apparently done.

Once discussions with Switzerland are completed, Jean-Claude Juncker, the prime minister of Luxembourg, said his country “would be in a position to decide the extent of the expansion” of the information exchange.

The summit meeting was billed as an opportunity to push ahead with a crackdown on tax avoidance, but it risked being overshadowed by mounting indignation over reports that American companies, including Apple, had sheltered profits in European countries like Ireland.

Findings by Senate investigators in Washington indicated this week that Apple sharply reduced its tax bill in the United States and the rest of the world by recording most of its worldwide income in Ireland and paying low corporate tax rates there.

The findings and subsequent outcry put the Irish prime minister, Enda Kenny, on the defensive even before he arrived here on Wednesday.

“I’d like to repeat that Ireland’s corporate tax rate is statute-based, is very clear and very transparent — and we do not do special deals with any individual companies in regard to that tax rate,” Mr. Kenny said Wednesday afternoon. “Our country has had its stable corporate tax rate for many years, but that’s not the only reason that companies come to Ireland.”

Similar controversies have risen in Britain about the low taxes paid by the British operations of American companies like Google and Starbucks.

The German and French leaders pledged on Wednesday to step up efforts to recover more funds from global companies.

“We will work toward ensuring companies have to pay more where they are based,” Angela Merkel, the German chancellor, said at a news conference after the meeting.

François Hollande, the French president, told a news conference that Europe should unite to combat profit-shifting by large corporations.

“We cannot accept that a certain number of companies can put themselves in situations where they escape paying taxes in ways that are legal today,” Mr. Hollande said. “We must coordinate at a European level, harmonize our rules and come up with strategies to stop this.”

Speaking on Wednesday at the Brussels summit, Prime Minister David Cameron of Britain insisted he was taking a tough line on taxes with major multinationals like Google, after that company was accused on Wednesday by Ed Miliband, the leader of the opposition Labour Party, of going to “extraordinary lengths” to avoid paying tax in Britain.

Mr. Cameron said he had raised the issue with Google’s executive chairman, Eric E. Schmidt. But Mr. Cameron also cautioned against making targets of particular firms. “I don’t think we’re going to solve this if we simply take one company or another company that is registered in Europe, this one in Ireland,” Mr. Cameron said.

Poll Shows European Union Loses Favor on Continent

The results of an annual survey by the Pew Research Center, a nonpartisan organization based in Washington, show a deepening disillusionment with the union in major member countries.

The results of the survey suggest that more citizens than ever could end up opposing the transfer of more power to European Union institutions that may be vital for transforming the euro into a viable currency over the long term.

“The effort over the past half-century to create a more united Europe is now the principal casualty of the euro crisis,” according to a report that Pew published with the survey results. The title of the report summed it up: “The New Sick Man of Europe: the European Union.”

The poll pointedly noted that, “No European country is becoming more dispirited and disillusioned faster than France.” Last year, 60 percent of the French surveyed said they had a favorable impression of the European Union. This year only 41 percent did, a decline of 19 percentage points that was the biggest annual drop among the countries surveyed.

The results corresponded to some degree to the health of a nation’s economy. Only Greeks and Italians professed less belief in the benefits of economic union than the French, according to Pew. In Germany, 60 percent held a favorable impression of the union.

That could have everything to do with the listless economy in France, which is on the verge of joining much of Southern Europe in recession and has an unemployment rate of 11 percent. The German economy has fared better and has a relatively low unemployment rate of 5.4 percent.

“French and the Germans differ so greatly over the challenges facing their economies that they look as if they live on different continents, not within a single European market,” the authors of the Pew report wrote. As a result, the “French look less like Germans and a lot more like the Spanish, the Italians and the Greeks.”

The gloomy view is understandable given the economic crisis in Europe.

“The limits of the European Union institutional architecture are perceived more directly by the citizens now,” said Enzo Moavero Milanesi, Italy’s minister for European affairs, in an interview. “They have always been known, but citizens expected a more rapid and efficient response to the crisis and ended up complaining about the lengthy procedures, the many meetings, the difficult discussions.

“But it’s a paradox,” said Mr. Milanesi. “The E.U. has made great steps toward further integration and a strengthened monetary union. We even started discussing forms of possible political union, but people are still disappointed.”

One of the smallest declines in sentiment — two percentage points, to 43 percent — was in Britain. But the economic union has never been popular there.

“We should try and renegotiate our relationship with the European Union,” said William Drake, co-founder of the investment advisory firm Lord North Street in London, expressing an opinion shared by many in his country. He added that many regulations were “not being properly discussed and debated by our own democratically elected Parliament. It sort of feels like we don’t rule our own country anymore.”

The polls were conducted during March in Germany, Britain, France, Italy, Spain, Greece, Poland and the Czech Republic, by telephone or in person, with between 700 and 1,100 adults in each country. Each poll has a margin of sampling error of either three or four percentage points.

In France, where voters eight years ago rejected a constitutional treaty meant to streamline decision-making in the European Union and lay out a blueprint for its future, 77 percent of Pew survey respondents said this year that European economic integration had made things worse for their country. That was an increase of 14 percentage points from the previous poll.

Reporting was contributed by Nicola Clark and David Jolly from Paris, Jack Ewing from Frankfurt, Julia Werdigier from London, Gaia Piangiani from Rome, Elisabetta Povoledo from Milan and Raphael Minder from Madrid.

In Midwest, Labor Presses for a Vote to Lock In Union Rights

Michigan’s unions are asking voters to approve a referendum on the ballot this November, known as Proposal 2, that would lock a series of labor protections into the state Constitution, including the right of public sector unions to bargain collectively and a prohibition against the legislature’s enacting a “right to work” law.

The ballot campaign represents an attempt by unions and their Democratic allies to slow or stop the wave of Republican-backed measures adopted in Wisconsin, Indiana, Ohio, Tennessee and other states in the last two years to curb collective bargaining and weaken unions, especially those representing government workers.

“Besides the presidential race, Proposal 2 is probably going to be the most significant thing on the ballot nationally,” said F. Vincent Vernuccio, director of labor policy at the Mackinac Center, a conservative research center based in Midland, Mich. “Michigan is surrounded by Wisconsin, Indiana, Illinois and Ohio — states that have taken wildly different views of private and public sector unions. The nation is on a teeter right now on union matters, and Michigan will give momentum to one side or the other depending on how this plays out.”

Business groups and Michigan’s Republican governor, Rick Snyder, say that if the referendum to enshrine labor rights in the Constitution is approved, it will cast a major cloud over the state’s business climate — broadcasting to the world that organized labor, whenever it deems fit, can use its muscle to go to the voters to trump the legislature and governor.

“Michigan’s union bosses are field-testing a new weapon,” said Rich Studley, president of the Michigan Chamber of Commerce. “If this weapon is successful in banning legislation, we’ll see it deployed in the 21 other states that allow initiatives and referendums.”

Further flexing their muscles, unions are sponsoring two other proposals on the Michigan ballot. One would repeal a law that allows emergency managers appointed to oversee financially distressed communities to void union contracts. Another would amend the Constitution to guarantee home health aides the right to unionize.

Both sides are flooding the airwaves with ads about Proposal 2, with each side accusing the other of using misleading scare tactics.

In one union-backed commercial, for example, a firefighter is wearing an elaborate fireproof apparatus over his head. “This air pack I’m wearing gives me 30 minutes to look inside your burning house and find you,” he says. “Having the most modern dependable equipment when the clock is ticking, that counts. If it comes from collective bargaining, the politicians can’t cut it without our say-so.”

Opponents are broadcasting an ad that begins with a child leaving for school. “When we send them off in the morning, we should be certain they’re safe in school,” the voice-over says. “If Proposal 2 passes, it would eliminate safety rules for school bus drivers. Worse, Proposal 2 could prohibit schools from removing employees with criminal records. That’s dangerous for kids and terrifying for parents.”

Although most of the campaign’s financial disclosures are not due until after the election, political experts estimate that more than $30 million will be spent in the fight, with national business and labor groups contributing substantial financing.

At the moment, the proposal’s chances of passing are difficult to predict. Proponents had a significant lead at first, but that has eroded as business-backed groups have escalated their attacks. A Detroit News poll released Oct. 12 found that 43.2 percent of the 600 people surveyed supported the proposal, and 41.8 percent opposed it. The difference was within the poll’s margin of error.

Union leaders say Proposal 2 has a simple aim: to protect collective bargaining against further assault.

European Union Intensifies Sanctions on Iran

The measures were the latest in a long series of sanctions from Europe, the United States and the United Nations Security Council, and were evidence of the worsening damage to Iran’s economy.

In a joint statement, European Union foreign ministers, meeting in Luxembourg, expressed “serious and deepening concerns over Iran’s nuclear program.” They added that in continuing to enrich uranium, despite Western concerns that it is aiming for a bomb, Iran was “acting in flagrant violation of its international obligations.”

Ahead of the meeting, Catherine Ashton, the European Union’s foreign policy chief, said: “We want to see a negotiated agreement. But we will continue to keep up the pressure.”

Ms. Ashton represents six major powers, including the United States, in nuclear talks with the Iranians. There have been five rounds of discussions since late 2010, the last of which ended in frustration in June. Ms. Ashton said the major powers would keep in contact with Saeed Jalili, Iran’s negotiator, to assess when to convene another meeting.

Iran is suffering acute inflation from the weakness of the rial, the national currency, which lost 40 percent of its value against the dollar in recent weeks. Outside economists have pointed to Iran’s currency troubles as evidence that the sanctions, which have severely restricted Iran’s ability to sell oil and conduct international banking transactions, are having a profound impact. Iran has been showing new signs of problems, including severe drops in monthly oil and automotive production and in the number of foreign commercial ships docking at its ports. How to contain Iran’s nuclear ambitions has become an issue in the American presidential race.

The new European sanctions were necessary as a result of a “continued failure to satisfy the world that the program was for peaceful purposes,” said William Hague, the British foreign secretary.

But Carl Bildt, the Swedish foreign minister, emphasized the need for a more intensive diplomatic effort alongside the sanctions.

“I think there are voices that sound like they want a war,” Mr. Bildt said. “We don’t want war.”

The latest measures make business deals between Europe and Iran far more complicated. The European Union “agreed to prohibit all transactions between European and Iranian banks unless authorized in advance under strict conditions with exemptions for humanitarian needs,” according to an official statement.

The statement said that the European Union also had “decided to strengthen the restrictive measures against the Central Bank of Iran. Further export restrictions have been imposed, notably for graphite, metals, software for industrial processes, as well as measures relating to the shipbuilding industry.”

Iran’s supreme leader, Ayatollah Ali Khamenei, who has described the Western sanctions as economic warfare, said the latest measures were nothing new.

“Creating instability is among the arrogant powers’ insidious policies,” the semiofficial Fars News Agency quoted him as saying during a speech in Shirvan, in eastern Iran. He praised Iran’s “exemplary political stability and tranquillity,” adding: “The enemies wanted to make our people depressed and exhausted through their sanctions. Our nation’s will and resolve to defend the ruling Islamic system should be a lesson to them.” 

James Kanter reported from Brussels, and Thomas Erdbrink from Tehran. Rick Gladstone contributed reporting from New York.

Nobel Peace Prize Awarded to European Union

Heiko Junge/European Pressphoto AgencyThorbjorn Jagland, the chairman of the Norwegian Nobel Committee, announced the winner of the peace prize on Friday in Oslo.

PARIS — By naming the European Union the recipient of the 2012 peace prize on Friday, the Norwegian Nobel Committee made an unconventional choice that celebrated the bloc’s postwar integration even as a financial crisis and political infighting threaten to tear it apart.

The European Union flag atop the Reichstag building in Berlin. The peace prize recognizes the union’s postwar efforts.

Members of the Nobel committee lauded six decades of reconciliation among enemies who fought Europe’s bloodiest wars while simultaneously warning against the hazards of the present. The decision sounded at times like a plea to support the endangered institution at a difficult hour.

“We see already now an increase of extremism and nationalistic attitudes,” said Thorbjorn Jagland, the former Norwegian prime minister who is chairman of the panel awarding the prize, in an interview after announcing the award. “There is a real danger that Europe will start disintegrating. Therefore, we should focus again on the fundamental aims of the organization.”

Yet on the very day that the award was announced in Oslo, leading European policy makers again publicly bickered over how to deal with Greece’s bailout. Germany’s finance minister, Wolfgang Schäuble, rejected calls from the French head of the International Monetary Fund, Christine Lagarde, to give Greece more time to make additional spending cuts to rein in deficits.

The intractable debt troubles in Greece have been at the heart of the financial crisis that has gone on for years and has taken a tremendous toll on Europe’s economy, breeding ill will between the suffering periphery and officials in Germany, who have called for painful austerity as the price of continued German support for the rising debt.

“The leader of the E.U. is Germany, which is in an economic war with southern Europe,” said Stavros Polychronopoulos, 60, a retired lawyer in Athens. “I consider this war equal to a real war. They don’t help peace.”

Mr. Polychronopoulos stood Friday in the central Syntagma Square in Athens, where residue from tear gas fired by the police during demonstrations on Tuesday to protest a visit by the German chancellor, Angela Merkel, still clung to the sidewalks.

In light of the recent upheaval, the Nobel announcement was greeted with surprise, perplexity and, from some corners, even mockery. “The Nobel committee is a little late for an April Fool’s joke,” said Martin Callanan, a British member of the European Parliament and the leader of the European Conservatives and Reformists Group. “The E.U.’s policies have exacerbated the fallout of the financial crisis and led to social unrest that we haven’t seen for a generation.”

Before making its choice, the Norwegian panel — located, as it happens, in an oil-rich kingdom whose population of five million people has steadfastly resisted membership of the 27-nation European Union — weighed 231 nominations. One committee member, a Socialist critical of the union, had a stroke recently and was replaced by a more Europe-friendly moderate, ensuring the committee’s tradition of unanimous decisions.

The peace prize is associated with diplomats or heads of state who have ended wars, or individuals like Mother Teresa and Archbishop Desmond M. Tutu fighting poverty or injustice. Last year’s peace prize was shared by President Ellen Johnson Sirleaf of Liberia; a Liberian antiwar activist, Leymah Gbowee; and Tawakkol Karman, a democracy activist in Yemen. The 2010 peace prize winner was Liu Xiaobo, a Chinese human rights campaigner.

But as it has in the past, notably in bestowing the 2009 peace prize on President Obama less than one year after he took office, the selection by the highly politicized committee sometimes reflects hope as much as achievement, seeking to bolster good intentions with a prestigious accolade that provides an unparalleled, if often contentious, global imprimatur.

Ms. Merkel called the award “an inducement and an obligation at the same time.” The announcement was taken by the European Union elite in Brussels — and by its surviving founders — as a moment of profound vindication. José Manuel Barroso, president of the European Commission, said the award proved that the European body was “something very precious.”

Alan Cowell reported from Paris, and Nicholas Kulish from Berlin. Reporting was contributed by Walter Gibbs from Oslo, Stephen Castle from London, James Kanter from Brussels, Rachel Donadio from Athens, Victor Homola from Berlin, and Scott Sayare and Maïa de la Baume from Paris.