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Back-door debt restructuring on the cards for Greece
It is widely reported that a deal on restructuring Greek debt could be imminent with EU officials in Athens to discuss the issue. The scheme being discussed is three pronged: firstly it would see Greece borrow another €50bn from the European Financial Stability Facility. Secondly it would see Greece use the EFSF to buy back bonds at between 65% - 75% of their nominal value from the ECB and private bondholders. Thirdly the plan would see the maturity of the bail-out loans extended by 30 years. In return, Greece would need to impose further austerity measures, specifically introducing a cap on its budget deficit into its constitution. If adopted the scheme is expected to re-profile two thirds of Greece’s €330bn debt by the end of the year. It has been compared to the Brady plan which rescued Latin America from bankruptcy in the 1980s.
Speaking at the World Economic Forum in Davos, Switzerland, on Friday, Greek Finance Minister George Papaconstantinou confirmed that informal talks are underway to find ways to reduce Greece's debt burden. The FT reports that some IMF and EU officials support Portugal being pushed into seeking a bail-out. Die Welt notes that the Italian government is holding up discussions on the new Stability Pact, as they do not agree on setting public debt limits at 60% of GDP.
Over the weekend Der Spiegel reported on the ‘pact for competitiveness’ which German Chancellor Angela Merkel is set to propose to eurozone leaders at the Summit on Friday, including increase of retirement ages across Europe, harmonisation of corporate tax rates and the introduction of a debt brake into all eurozone members’ national constitutions. Bloomberg suggests that Merkel will ask for this in return for an increase in the eurozone bail-out fund.
Handelsblatt quotes government sources saying that the plan still needs to be agreed upon with the coalition partner FDP. On his Coulisses de Bruxelles blog, Jean Quatremer argues “the French have already showed opposition to a pension age of 62 years; they will detest retiring at 67”. FT Deutschland and Handelsblatt report that the ECB is keeping interest rates low for fear of harming the weaker eurozone members or destabilising their weak banking sectors, with inflation fear in Germany as a result.
A recent poll conducted by the Economist Intelligence Unit and commissioned by RBC Capital Markets shows that more than four out of five senior executives, or 85%, believe that there is a chance of one or more countries leaving the eurozone in the next three years, while two in three, or 60%, said there was a chance the eurozone would break-up over the next three years.
WSJ EUobserver Spiegel Coulisses de Bruxelles Guardian FT FT 2 FT 3 FTfm FT 4 Jornal de Negocios Les Echos Reuters Expansion Handelsblatt Coulisses de Bruxelles 2 FT Deutschland Welt Les Echos 2 Euractiv France 2 To Vima Times 2 EurActiv EurActiv 2 FT Deutschland FT Brussels Blog European Voice AFP Euractiv France
FT Alphaville features the speech given at a recent Open Europe event by Professor Markus Kerber, the initiator of a lawsuit at the German Constitutional Court against the bail-outs of Greece and Ireland.
FT Alphaville Open Europe events
82% of Irish want to renegotiate EU/IMF bail-out terms
The Irish government is set to borrow €3.5 billion from the eurozone bail-out fund in the next few days, about €200 million more than originally sought. Reuters reports that the Irish Labour party has said that the EU needs to give Ireland an extra year, until 2016, to bring its budget deficit down to the EU limit of 3% of GDP. A poll for the Sunday Independent revealed 82% of participants believed the next government should seek improved repayment terms, and 84% said it must renegotiate the terms of the senior bondholders, who are currently being repaid for their risky investments.
Irish Independent Irish Times BBC news Reuters
UK accuses Commission of resisting CAP reform
Saturday’s Telegraph reported that, in a letter to EU Agriculture Commissioner, Environment Secretary Caroline Spelman has accused the Commission of resisting reform to the £55bn a year Common Agricultural Policy. “I have some real concerns that the proposals you set out will not make a meaningful difference,” she wrote. “The CAP cannot be immune from the hard choices we are making elsewhere, which is why our government is calling for a very substantial cut to the CAP budget.”
Open Europe Director Mats Persson was quoted saying, “Not a single penny more of the UK's rebate should be given up until we see deep cuts and a series of tangible reforms to the CAP, resulting in a far better deal for UK taxpayers. The EU's farm policy is a running disaster; tinkering at the margins just won't do anymore”.
Saturday's Telegraph
Fraud in the EU’s Emission Trading Scheme has cost taxpayers €5bn
A feature in the Sunday Telegraph reported that fraud in the EU’s Emission Trading Scheme (ETS) has cost taxpayers an estimated €5bn. The article quotes an unnamed broker saying, "There have been warnings after warnings that regulation of the system is lackadaisical and inept…You expect it to be properly regulated but Europe seems to run it more like a church raffle than a professional commodities market."
Sunday Telegraph Mail on Sunday
Le Figaro: EU lacks clear position on Arab crises
An article in Le Figaro criticises the EU’s response to the recent crises in the Arab world arguing, “As regards Egypt, institutional Europe was lacking a clear line until [French President] Nicolas Sarkozy, [German Chancellor] Angela Merkel and David Cameron decided to put pressure on [Egyptian leader] Hosni Mubarak to implement the ‘political, economic and social reforms’ he had pledged. Until then, Catherine Ashton, the voice of [the EU’s] diplomacy, and Herman Van Rompuy, President of the [European] Council, had been grinding topical words about the rejection of violence and the necessity of dialogue.”
Le Figaro El Pais: editorial
The FTfm quotes Carol Ferguson, outgoing Chairman of the Association of Investment Companies, saying that the implementation of the EU’s AIFM Directive and the review of the MiFID Directive are the key challenges facing her successor. “On the whole we find the Treasury and the FSA pretty understanding. Our difficulties come more from Europe”, she said.
FTfm
Saturday’s Telegraph welcomed David Cameron’s speech in Davos arguing, “The message that risk-averse, over-regulated economies will wither in a global economy must be taken to the heart of Europe.”
Saturday's Telegraph: Leader
Writing in the Sunday Times, Dominic Raab MP noted that the European Arrest Warrant can see people extradited to other EU countries with “flawed justice systems and appalling prison conditions.”
Sunday Times: Raab
Full Fact cites Open Europe’s study on EU regulation in an article discussing the proportion of national laws derived from the EU.
Full Fact Open Europe research
Saturday’s Mail reported that the UK has been given two months to agree to an EU Directive that would put an end to the practice of paying crews on vessels flying the 17th century “Red Duster” in line with wage rates in their native countries. The article notes that the increase in wage bills could push companies to register vessels under foreign flags in future.
Saturday's Mail Saturday’s Express
FAZ reports that an unusually broad coalition within the Bundestag, composed of Christian Democrats, Liberals, Social Democrats and Greens, is opposing plans for EU contract law, as proposed by the Commission. The paper notes that competition is "a tool to discover good law".
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The European Court of Justice (ECJ) will shortly rule on whether using a person's sex to calculate their insurance premiums breaches equality legislation. Insurers warn it could increase costs for consumers.
Saturday's Telegraph Express
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