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German Parliament warns it may not approve revised eurozone bailout deal;
Greece offered limited debt restructuring
Eurozone leaders agreed numerous measures aimed at taclking the eurozone debt crisis at Friday’s summit. They agreed to increase the lending capacity of the European Financial Stability Facility to €440bn, as originally specified, and decided that the permanent bailout mechanism will be able to lend up to €500bn through increased guarantees from triple-A states and paid-in capital from those with weaker balance sheets. The funds will not be able to purchase government debt on the open market. However, they will be allowed to buy it directly from struggling governments but only after they have agreed to significant austerity measures, similar to those imposed during a bailout. This means that the ECB is likely to have to continue buying government debt. German Chancellor Angela Merkel said the difference between buying bonds directly from a struggling government and making loans to it "is relatively irrelevant."
Leaders also agreed a ‘pact for the euro’ which includes caps on government spending, close monitoring of pension schemes, and limits on public sector wage increases. In its current form it is merely an agreement on principles and lacks any provisions for enforcement. A commitment was further made to force countries to close the gap between their current debt levels and the EU’s legal debt limit – 60% of GDP – by 5% each year.
On the current bailout terms, a deal was reached with Greece to reduce the interest paid on bailout loans by 1% and extended the repayment period from 4.5 years to 7.5 years. This is in exchange for Greece agreeing to sell off €50bn in government assets. Kathimerini reports that the deal will save Greece €6bn. A similar deal was offered to the Irish, but in exchange for an increase in corporation tax, however it was rejected. The Irish independent quotes a poll, conducted by Sunday Independent/Quantum Research, which shows that 78% of the Irish public think Irish Prime Minister Enda Kenny was correct to refuse to increase corporation tax rate in return for more favourable rates on the €85bn IMF/EU bailout.
Reuters reports that several MPs from Germany's ruling coalition have criticised Chancellor Angela Merkel’s concessions, threatening to vote against the deal. While Foreign Minister Guido Westerwelle called the deal an acceptable compromise, MP Frank Schaeffler said that "the result contradicts the position of the FDP group in parliament”; a majority in the Bundestag is therefore not guaranteed. The harshest critique came from the Christian Social Union (CSU), Bavarian sister party to Merkel's CDU. "The government has stepped over a red line that the parliamentary groups had clearly defined," Thomas Silberhorn MP said, adding that allowing the fund to buy bonds was a "serious failure - economically and in terms of European policy - that presents a most precarious tightrope walk."
The Portuguese government announced a set of new measures on Friday aimed at reducing public spending by a further 2.4% of GDP and increasing revenue by 1.3% of GDP. Les Echos reports that Pedro Passos Coelho – the leader of Portugal’s main opposition force, the Social Democratic Party – announced that his party will not support these new austerity measures, putting their adoption in Parliament at risk. Coelho told reporters that “with the announced measures, the government has broken the agreement which had allowed for the adoption of the 2011 budget…I don’t know whether this will result in a political crisis.”
Reuters FT EurActiv European Voice Irish Independent European Council Conclusions Kathimerini EU Observer Euractiv La croix L'Expansion.com avec AFP FT 2 FT 3 WSJ WSJ 2 WSJ Brussels Blog WSJ 3 Irish Times Irish Times 2 Sunday Times Sunday Telegraph Telegraph El Pais El Pais 2 Jornal de Negocios 3 Expansion Jornal de Negocios Jornal de Negocios 2 Saturday’s Telegraph Saturday’s Independent Saturday’s Times EUobserver 3 Saturday’s Independent 2 Saturday’s Guardian BBC Le Monde Coulisses de Bruxelles FT Weekend 2 EUobserver 2 EUobserver 3 Les Echos Irish Independent 2 Bloomberg FT Weekend Les Echos FAZ Leader Welt Welt 2 Handelsblatt: Gerken FD
New campaign for in/out EU referendum launches
A new cross-party campaign for an in/out referendum on the UK’s membership of the EU will launch this week. The “People’s Pledge” will focus initially on the 100 most marginal seats, targeting vulnerable MPs. Polling for the campaign launch shows that 61% would like a referendum on EU membership, with just 25% against. It means support for a referendum on the EU is more than double the level for the referendum on changing Britain’s voting system planned for May 5. The Mail argues that “Wherever you stand on the issue, isn’t it time there was an honest, open, national debate on EU membership, and the British people were asked what they think?”
Conservative Home Mail Mail: Leader Spectator: Coffee House blog
Eurozone comment round-up;
Henkel: Eurozone has destroyed competition in favour of “a transfer union”
Writing in the Guardian, former President of the Federation of German Industries Hans-Olaf Henkel argues that the eurozone is becoming “a transfer union, a community of redistribution in which a new competitive discipline will emerge: who can tap the others for the greatest amount.” Henkel adds that, “If Europe wishes to go back to being a creative community based on competition, it will need a new approach that takes account of the prevailing economic differences that exist” and proposes splitting the eurozone into Northern and Southern blocs.
In the Telegraph, Ambrose Evans-Pritchard describes the summit as a “triumph” for German Chancellor Angela Merkel but adds that, “What is clear is that sovereign states are being forced to cut wages and dismantle parts of their welfare state under foreign diktat, with a gun held to their heads. This will not be forgotten lightly.”
In the Irish Independent Sam Smyth argues, “Ms Merkel and Mr Sarkozy's two-hand reel to the tune of ‘a pact for competitiveness’ sounds like the opening bars of a United States of Europe. And a United States of Europe where Ireland would ‘pool’ its sovereignty – as it once did when Dublin played second fiddle to London before independence – would not be sellable to its citizens.”
A leader in the FT Weekend argued that, “European leaders cannot afford to pretend much longer that all will be well with a bit more belt-tightening and a set of fiscal rules that lack credible enforcement mechanisms. The EU’s next summit, on March 24-25, will have to do much better.” The FT Alphaville blog writes, “Did anyone notice this weekend’s Greek debt restructuring?” It argues that the lowering of interest rates and the extension of Greece’s EU-IMF bailout loans look “like restructuring and rescheduling to us.”
FT: Alphaville Guardian: Henkel FT: Munchau WSJ: Stelzer Irish Independent: Smyth Coulisses de Bruxelles Telegraph: Evans-Pritchard FT Weekend: Editorial
EU leaders split over Libya no-fly zone
At Friday’s emergency summit, EU member states called unanimously for the Libyan leader Col Muammar Gaddafi to step down, but dismissed talk of possible military action such as a no-fly zone over Libya. Instead leaders ambiguously agreed to examine “all necessary options”, working with the African Union, the UN and the Arab League. The meeting saw tensions rise as the no-fly zone option divided the UK and France on one side and Germany on the other.
The Arab League approved a resolution on Saturday calling for the UN Security Council to issue a mandate for a no-fly zone "against any military action against the Libyan people". Following the news, France promised to step up efforts to garner support for the plan.
In a letter to the FT Weekend, Lord Mandelson, Lord Kinnock and Lord Ashdown argue that the EU “must make a wider offer in terms of aid, markets and mobility. That means more generous and better targeted development packages, removing the last barriers to the import of fruit and vegetables from the region, and adopting more flexible visa regimes. The customs union between the EU and Turkey could be extended to North African countries”.
Times: leader El Pais: Aguirre FT: Ashdown EurActiv EurActiv 2 European Voice European Voice 2 Irish Times Publico FT Weekend Saturday’s Telegraph Saturday’s Times Saturday’s Mail Saturday’s Express Saturday’s Sun Saturday’s Guardian Saturday’s Independent BBC: Hewitt BBC: Robinson FT Deutschland: Leader EUobserver 2 EUobserver 3 BBC Saturday’s Telegraph: Leader FT Weekend: Letter EUobserver Observer: Cohen Evening Standard Evening Standard Open Europe Blog Open Europe Blog 2
EUobserver reports that nuclear experts from EU member states will meet in Brussels this week to discuss the damage caused to Japan's Fukushima nuclear power plant and the potential consequences for Europe. Meanwhile, Austrian Environment Minister Nikolaus Berlakovich called on Sunday for a series of ‘stress tests’ to ensure the safety of European nuclear plants, reports AFP.
EUobserver AFP SternZeit
Swedish Radio notes that the Commission could impose a €17m fine on Sweden, should the country fail this week to reach a decision on how to implement the EU’s Data Retention Directive. The Swedish Parliament will vote on a compromise proposal on Wednesday, amid fears that the proposed law undermines civil liberties and privacy. The government may have to rely on the anti-immigrant party, the Sweden Democrats, to get the proposal adopted.
Swedish Radio
The Guardian reports that Energy Minister Chris Huhne has won the support of six other European governments to toughen the EU's climate target from the current 20% emissions reduction by 2020 to a 30% target, due to be discussed in Brussels on Monday. Meanwhile, the Sunday Times reported that the UK Government’s plans to introduce a carbon price floor to the EU’s emissions trading scheme, along with other initiatives, could double household energy bills.
Sunday Times Guardian Guardian: Huhne EurActiv El País El País 2
EUobserver reports that the EU is considering a range of different measures to restrain member states’ use of raw materials coming from global conflict zones.
EUobserver
The BBC reports that the European Commission has given the UK three more months to meet EU air quality standards in Greater London.
BBC
The Sunday Telegraph reported that, 20 months after being extradited under a European Arrest Warrant, British student Andrew Symeou went on trial in Greece last week. The article noted that his translator could not tell the difference between the word for “juror” and the word for “witness.”
Sunday Telegraph
The Mail on Sunday reported that EU Commissioner Andris Piebalgs, who oversaw the EU’s ban on traditional light bulbs, has left the outside lights at his home burning day and night.
Mail on Sunday
The Sunday Times reported that Climate Change Minister Greg Barker has called in the Serious Organised Crime Agency to clamp down on the criminals targeting carbon credits from the EU’s emissions trading scheme. More than £43m of credits have been stolen in the past year, paralysing the trading system in many EU countries.
Sunday Times
The WSJ reports that EU Internal Market Commissioner Michel Barnier said yesterday that the introduction of a financial transactions tax in Europe would be fair.
WSJ
Le Journal du Dimanche reports on a new IFOP poll showing that Nicolas Sarkozy has become the most unpopular centre-right President of France’s Fifth Republic, as 71% of respondents said that they were unhappy with his performance.
JDD
A Guardian/ICM poll has found that a small majority of Germans (59%) want to keep the euro, while Poles (48% to 40%) oppose their country joining the single currency.
Guardian: Poll
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