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New Open Europe briefing: UK could be required to contribute billions to Portuguese bail-out;
Portugal closer to bail-out after Prime Minister resigns over austerity plans
Open Europe has today published a new briefing estimating that a bail-out of Portugal would need to be at least between €60bn and €70bn in order to cover the country’s deficit and bond repayments for three years. The UK would likely take part in a Portuguese bail-out, since part of the money would be drawn from the European Financial Stability Mechanism (EFSM), the €60bn rescue fund which is activated by majority voting.
Open Europe estimates that the UK’s share would range from €810m to €3.7bn, in the event of a €60bn bail-out, and €945m to €4.26bn in the event of a €70bn rescue operation. Open Europe’s findings are cited in the Telegraph, Mail, Guardian, Mirror, Express, Evening Standard, in several local papers, on Gavin Hewitt’s BBC blog, by PA and were featured on BBC and SKY news bulletins. Open Europe’s Raoul Ruparel is quoted saying: "The cases of Ireland and Greece clearly illustrate that the EU's strategy – to throw good money after bad – is failing. Rather than simply taking a bailout, it would be better in the long run for Portugal to restructure its debt." Open Europe’s Mats Persson appeared on the BBC’s Today programme and SKY News. Meanwhile, Het Financieele Dagblad quotes a senior eurozone official saying: "I expect that [the Portuguese] will ask for a loan soon. In consulting talks there was talk about an amount between €50bn and €100bn."
Portuguese Prime Minister José Socrates was forced to resign yesterday after losing a crucial vote on his government’s austerity plan. Portuguese President Aníbal Cavaco Silva is now widely expected to call early elections. However, according to Portugal’s electoral law, elections cannot be held for at least 55 days after the dissolution of Parliament.Socrates will attend the two-day European Council summit due to kick off today in Brussels as a caretaker Prime Minister. Portuguese daily Expresso quotes Portugal’s former Finance Minister Bagão Félix saying that Socrates’s resignation has happened in the “least opportune moment” and that “external aid is inevitable”.
The political vacuum created by his resignation risks complicating negotiations over an EU-IMF aid package.The senior eurozone official quoted by Het Financieele Dagblad noted that "Socrates is a resigning Prime Minister...The EU and the IMF have never given a loan to a resigning cabinet, so if Lisbon needs the money before the elections, creative plans will need to be made." However, European Commission President José Manuel Barroso is quoted by the FT saying, “If in one of the countries we have an interim government – I think Belgium is [an interim government] for almost one year – it will not be the only case. So far, that was not considered a major problem, at least from a European perspective.”
Open Europe briefing Open Europe press release Independent FT BBC EUobserver FT Alphaville FT 3 WSJ Times Guardian El Pais Le Figaro El País Jornal de Negócios 2 Irish Times Expresso 2 Expresso 3 Correio da ManhãJornal de Negócios 3 Jornal de Negócios 4 Expresso Jornal de Negócios Publico Publico 2 Correio da Manhã 2 FD Guardian 2 Telegraph Mail Mirror Express Evening Standard IFA This is Money Sunderland Echo Yorkshire Evening Post MSN Money Liverpool Echo BBC: Today BBC: Hewitt
Germany to seek re-negotiation of permanent bail-out fund;
Decisions on temporary bail-out fund delayed until June
The FT reports that German Chancellor Angela Merkel will seek to re-negotiate a deal reached by EU finance ministers earlier this week on the European Stabilisation Mechanism (ESM) – eurozone’s post-2013 permanent bail-out fund – at the two-day European Council summit due to start today in Brussels. Merkel will try to negotiate a more gradual timeline for Germany’s €22bn capital contributions to the fund.
Handelsblatt reports that Luxembourg’s Prime Minister Jean-Claude Juncker has been angered by Merkel’s plans to re-negotiate the deal, and complained that she was undermining “a compromise which had been hard to achieve between 27 EU member states.”
Meanwhile, draft summit conclusions seen by Reuters read: "The preparation of the ESM treaty and the amendments of the EFSF [European Financial Stability Facility, the eurozone’s temporary rescue fund] agreement, to ensure its €440bn effective lending capacity, will be finalised so as to allow national procedures to be completed in good time for signature of both agreements at the same time before the end of June 2011."
The front page of the Irish Independent reports that an emergency meeting of EU finance ministers could be called because EU leaders are concerned that rescuing Irish banks will cost more than the €35bn earmarked in the bail-out deal. Credit rating agency Moody's has downgraded the senior debt and deposit ratings of 30 Spanish banks.
In FAZ, Werner Mussler writes that the ‘pact for the euro’ fails to address the eurozone’s design flaws because both decisive options – either progress towards a federal European state or disbanding the eurozone altogether – are not politically plausible, hence the EU has “to somehow muddle through”. Without a resolution of the European banking crisis, there is no reason to believe member states will be able to contain future crises in the eurozone, he argues.
WSJ: Roche Handelsblatt Handelsblatt 2 Elsevier France 24 Bloomberg FT 2 Les Echos Irish Times Irish Times 3 Irish Times2 Irish Times 4 Irish Independent FAZ: Mussler Irish Independent: McWilliams Irish Times: Beesley FT: Rattner WSJ: Smith WSJ: Stark
David Cameron is to urge European countries to introduce an aggressive programme of liberal economic reforms amid concerns the eurozone’s “pact for the euro” could damage the EU’s overall competitiveness, leaving Britain’s long term interests at risk, reports the FT.
FT
MEPs to allocate at least £58m for EU “House of History”
The Telegraph reports that the European Parliament is to defy member state governments by committing at least £58m to an EU “House of History”, which aims to foster a "common historical memory" for the EU, despite a failure to agree on common interpretations of events such as both World Wars.
Telegraph
EU fraud agency refused entry to MEPs’ offices, despite corruption allegations
The FT reports that officials from OLAF, the EU's anti fraud agency, have been blocked from searching the offices of the three MEPs accused of taking money from fake lobbyists to introduce amendments to EU regulations. European Parliament President Jerzy Buzek is quoted by the BBC saying he would "stand guard of the honesty of the chamber", although Austrian independent MEP Hans-Peter Martin claimed there could be many more MEPs implicated.
Radio Romania International reports that the Romanian National Anticorruption Directorate is investigating Adrian Severin MEP, the only of three MEPs who refused to resign, for income-related irregularities. Meanwhile, Romanian MEP Monica Macovei is calling for the European Parliament to overhaul staff rules to outlaw MEPs from holding additional jobs.
FT BBC RRI EUobserver
EU Foreign Minister Baroness Catherine Ashton’s top advisor on the Western Balkans and the Middle East, Robert Cooper, is quoted in EUobserver defending the violent crackdown on protestors in Bahrain saying, “It's not easy dealing with large demonstrations in which there may be violence. It's a difficult task for policemen. It's not something that we always get right in the best Western countries and accidents happen.”
EUobserver BBC
Divisions continue over the role of NATO in the Libyan campaign;
Les Echos: It’s increasingly difficult to see the added value of EU’s new diplomatic service
Divisions continue over the role of NATO in the Libyan campaign, reports the Guardian. El País reports that Germany yesterday withdrew its Mediterranean naval forces, including 620 soldiers from NATO’s command. Meanwhile, a comment piece in Les Echos argues that the EU leaders’ summit in Brussels offers the opportunity to evaluate the EU’s foreign policy and notes that “it’s increasingly difficult to see the ‘added value’ of [EU Foreign Minister Baroness Catherine Ashton] new External Action Service.”
Jornal de Negócios Diário de Notícias i Informação Publico EUobserver EUobserver 2 WSJ Times Guardian El Pais El Pais: Bassets El Pais Spectator: Liddle New Statesman New Statesman 2 Guardian 2 Les Echos
EUobserver reports that the EU launched new guidelines yesterday on EU consular protection, urging member states to print a line in citizens’ passports informing of special rights as ‘EU citizens’.
EUobserver EU consular protection website
Former MEP Den Dover, expelled from the Conservative Party in 2008, has been ordered to repay £345,289 of “unjustified” claims by the European Court of Justice. Mr. Dover had originally faced a demand for £538,000 relating to expenses claimed between 1999 and 2008, which went to a company which listed Mr Dover's wife and daughter as directors.
BBC Independent
The EU has reported a “serious” cyber attack on the Commission and the EU’s Foreign Service (EEAS) ahead of summit, a spokesman told the BBC.
BBC EUobserver
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