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German Economy Minister: Greek bailout to top €135bn;
Poll: 65% of Germans are against bailout
Fears that Greece's debt crisis may spread across the eurozone were raised yesterday, when credit rating agency Standard and Poor's downgraded Spain's rating, and the head of the OECD Angel Gurría said: "It's not a question of the danger of contagion; contagion has already happened. This is like Ebola. When you realise you have it you have to cut your leg off in order to survive."
Spiegel reports that German Economy Minister Rainer Brüderle said the rescue package could be as much as €135 billion over three years, but added "I can't rule out the possibility that the amount will be higher." Jürgen Trittin, parliamentary leader of the Green party, said that two thirds of the full Greek requirement over three years would have to be met by the eurozone member states, with a contribution from Germany of at least €16bn. However writing in the Telegraph, Edmund Conway argues that, assuming Greece needs around €100bn over the next few years, the IMF can only provide a maximum of €20bn.
On the costs to the German taxpayer, German Finance Minister Wolfang Schauble is quoted by FAZ saying "We hope it will cost nothing, because what we are doing is making credit available so that Greece can remain solvent". However, the Telegraph quotes Hans-Werner Sinn, head of the IFO economic institute, saying that Greece is likely to eventually "ask for Germany to waive the debt." Asked if taxpayers would ever get their money back, he said, "To tell you the truth, no."
PA reports that German Chancellor Angela Merkel said last night she would only commit to the bailout if Greece undertook further austerity measures. However, Andreas Loverdos, Greece's labour minister, has said that they "cannot accept" EU-IMF demands for further wages cuts.
Mr Trichet said that his "working assumption" was that the negotiations in Athens on the bailout would be finished "within two days, or during the weekend", and the FT reports that Germany and France are planning to hold parliamentary votes next week on the rescue package.
The Guardian reports that Merkel added that it had been a mistake to allow Greece to join the eurozone: "It turned out that the decision [in favour] may not have been scrutinised closely enough" she said.
There is widespread opposition to the bailout in Germany and a new poll in FAZ shows that only16% of Germans support the Greek aid package, while 65% are against it. When asked whether they had confidence in the euro, 32% said they did, down from 44% last year, while 45% said they had "slight confidence" in the euro.
Bloomberg reports that economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc have warned that Europe may need to provide as much as €600bn if they are to stamp out the eurozone's fiscal crisis, and quotes David Mackie, Chief European Economist at JPMorgan in London: "It may now be time for the euro area to do something much more dramatic in order to prevent the stress from creating another broad-based financial crisis which pushes the region back into recession."
A leader on the front page of FAZ argues: "the economic consequences of a failure of the monetary union - which appears likely now - can not be calculated, this is all the more true for the EU as a whole. Nobody should have illusions what consequences this will have for the overall mechanics of the European compromise machine."
IHT FT Telegraph City AM City AM 2 Irish Independent BBC EUobserver Today programme Bloomberg FT: Rachman blog Telegraph 2 Telegraph 3 FT: Barber European Voice: Editorial FT 2 EUobserver 2 Telegraph 4 Telegraph 5 Telegraph: Conway Guardian Irish Times Irish Times 2 Irish Times 3 Irish Times 4 IHT Express: McKinstry Mail Spectator: Coffee House blog Guardian 2 Guardian 3 Express Guardian 4 WSJ WSJ: Analysis Guardian 5 Independent Independent 2 Independent 3 Independent 4 FAZ Stern Deutsche Welle Die Welt FTD Spiegel Les Echos Nouvel Obs Le Figaro Les Echos Il Sole 24 Ore Focus Trouw Reuters Kathimerini El Pais RTVE.es Spiegel Focus Telegraph FT 3 EurActiv OE blog Times: Leader FT: Leader Guardian: Leader Guardian: Elliott Independent: Prosser Die Welt Spiegel
Commission to propose majority voting on member states' budgets
European Voice reports that on 12 May the Commission is to propose a big advance in EU co-ordination of euro zone national economic policies. Proposals will include the creation of a "permanent crisis resolution mechanism" to handle any future Greek-like scenario, offering financial support through bilateral loans from other eurozone countries, with lending conditions fixed in advance. They will also include a toughening up of the stability and growth pact - through the application of sanctions, such as withholding EU structural funds - and mutual reviews of draft budgets.
EU Monetary Affairs Commissioner Olli Rehn will propose that eurozone finance ministers vote by qualified majority on whether draft national budgets are in line with EU economic guidelines and rules on fiscal discipline, though it is unclear what would happen if eurozone leaders voted against a national budget. The eurozone would also adopt recommendations about what should be in countries' budgets.
Irish Foreign Minister forgets official EU line on debt restructuring for Greece
EU President Herman Van Rompuy insisted yesterday that debt restructuring for Greece was "out of the question" and Commission President José Manuel Barroso said it was "not an option". The Guardian reports that British banks have an estimated combined exposure of £25bn to Greece and £75bn to Spain. The exposure of French and German banks to Greece is much greater at £52.5bn and £29.5bn respectively.
The Times reports that the Irish government has disowned comments from Foreign Minister Micheál Martin, supporting the idea of Greek debt restructuring. Mr Martin said that restructuring was "a legitimate initiative that they may in time have to take". Writing in the paper Bronwen Maddox argues: "The rescheduling of Greece's debt, which now seems all but inevitable, could shake banks in France, Switzerland and Germany. It could trigger a flight from Portuguese and even Spanish debt, hitting British banks hard."
Writing in the FT, Jean Pisani-Ferry and Andre Sapir from the Bruegel think-tank argue that, "Given the likelihood of debt restructuring down the road, it should waste no time in designing a European debt resolution mechanism to help members with unsustainable debt to resolve it with their creditors in an orderly way."
FT: Pisani-Ferry and Andre Sapir Times FT Times: Maddox Guardian WSJ 2 Mail
Based on an investigation by Open Europe, the Express challenged Nick Clegg to explain whether he made a personal profit on selling the Brussels house he owned from 2001 to 2005, while receiving taxpayer-funded accommodation allowances whilst he was an MEP.
Cameron: "I won't take us into the euro"
The Express reports that David Cameron yesterday accused Labour and the Liberal Democrats of plotting to scrap the pound and taking the UK into the euro. He is quoted saying, "The Conservatives have a very clear policy on this. If I am, and as long as I am, your Prime Minister I won't take us into the euro." He also argued that "If we were in the euro, our taxes would be taken to bail out Greece".
Meanwhile, in an interview with the FT Gordon Brown, when asked whether the Greek crisis has hardened his feelings towards the euro, said: "We will not be joining the euro in the immediate future, let's put it like that."
The Telegraph reports that Nick Clegg believes that "the British remain hostile towards the European Union because of their nostalgia for days of empire", and that joining the EU "was a kind of admission of weakness" for the UK. The article predicts that "his comments are likely to anger voters who dislike the EU because of its interference in British laws, red tape and lack of accountability".
Martine Aubry: the future of Europe is questionable
Reuters reports that Martine Aubry, the leader of the French Socialist party, said yesterday that the crisis in Greece has drawn into question the future of Europe and that Europe needs to strengthen itself if it is to not disappear. She is quoted saying, "We are all extremely concerned because beyond Greece, it is the future of Europe which is at stake". She also stressed the need to accelerate global financial regulation, saying "Europe must be behind Obama to regulate the financial system, otherwise we will have another Greece tomorrow and Europe will go off radar."
UK's contribution to EU set to rise in 2011 as Commission proposes 6 percent budget increase
The Mail reports that the European Commission's draft for the 2011 EU budget will see a six percent increase, pushing the budget up by £7billion to £114billion. The article notes that the UK is the second highest net contributor to the budget this year, paying in £7.6billion. This will increase by an extra £450million if the budget increase is approved by member states and the European Parliament.
Spanish EU Presidency looks to bring forward AIFM Directive negotiations
European Voice reports that Spain, which holds the EU's rotating Presidency, is looking to speed up talks on the EU's proposed Directive to regulate hedge funds and private equity managers (AIFM Directive). Spain wants to put discussion of the proposal to a meeting of finance ministers on 18 May, bringing forward the previously planned date of 8 June. The article notes that diplomats have suggested that the accelerated timetable reflects Spanish concerns about its Presidency's record.
European Voice Telegraph: Hannan blog Open Europe research Open Europe blog
Ex-Commissioners take up posts at Ryanair and RBS
The Irish Independent notes that ex-Internal Market Commissioner Charlie McCreevy accepted a job at airline Ryanair over a month before he formally stepped down from his EU post. The EU's Code of Conduct obliges former Commissioners undertaking a new job within a year of leaving office to "behave with integrity and discretion as regards the acceptance...of certain appointments or benefits". Last month, Air France launched a major legal battle against Ryanair, accusing it of receiving €660m a year in subsidies, in violation of EU state aid rules.
Meanwhile, EUobserver notes that former Industry Commissioner Günter Verhuegen has taken a job with the Royal Bank of Scotland.
Irish Independent European Voice EUobserver
Nieuwsblad Transport reports that a "lobby war" has emerged against the EU's CO2 limit for company vans, with producers calling for a delay in implementation.
The WSJ notes that a legal adviser for the European Court of Justice is expected to hand down a crucial opinion today, affecting EU competition cases, on whether privacy rules on correspondence between lawyers and clients applies to in-house as well as external lawyers.
EurActiv report that according to "insiders", the EU's 'Reflection Group' (known as the 'wise men group') have chosen to work with "privacy, not secrecy". They are due to present their report which will identify the key issues which the European Union is likely to face in the future and how these might be addressed on 9 May.
NRC Handelsblad reports that EU Foreign Minister Catherine Ashton has sent a letter in German to the German Foreign Minister Guido Westerwelle on the use of German in the EU diplomatic service, pointing out that diplomats abroad will not be obliged to be able to speak German.
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