Europe
EU working on ‘plan B’ to avoid Greek default if parliament rejects austerity package;
David Miliband: Greek default is “inevitable”
A 48-hour general strike has begun in Greece today, as the Greek parliament discusses the new €28bn austerity package. A final vote on the plan is expected tomorrow. Reuters quotes eurozone sources revealing that EU officials have been working for weeks on a ‘plan B’ to avoid a Greek default if the austerity package is rejected, but no details are given on what it would involve.
Meanwhile, yesterday French President Nicolas Sarkozy said that an agreement has been reached with French banks over plans for a voluntary ‘rollover’ of Greek debt. Under the French plan, private banks would re-invest 50% of their maturing Greek debt in 30-year Greek bonds. A further 20% of maturing Greek debt would be re-invested in bonds issued or possibly guaranteed by the eurozone’s temporary bail-out fund, the EFSF, or the European Investment Bank, reports La Tribune.
Open Europe’s Mats Persson is quoted in the Telegraph saying that, even with the backing of the EFSF, there is "little incentive" for private creditors to sign up to France’s proposal because of the increasing likelihood of a Greek default. Standard & Poor’s Head of European sovereign ratings Moritz Kraemer told Austrian television that “it is conceivable” that private creditors can contribute voluntarily to a Greek bail-out without triggering a downgrade. However, he added that he does not believe that current discussions have presented “a sustainable solution to Greece’s debt problem.”
Open Europe’s Raoul Ruparel is quoted by the BBC arguing: “In the long run you need to at least consider the possibility that the eurozone will break up, and you need to plan for it because if it happens in a disorderly manner it's going to be horrible for everyone.” Open Europe’s briefing on the second Greek bail-out is quoted by Daniel Hannan on his Telegraph blog, FX Street, Czech financial daily Hospodarske Noviny and Polish news site Interia.pl.
During a debate in the House of Commons yesterday, former Foreign Secretary David Miliband said that a Greek default is “inevitable”. Meanwhile, La Stampa reports that the spread between Italian government bonds and German bunds reached 223 basis points yesterday, the highest level since the introduction of the euro in 1999. The Italian government is due to endorse a new austerity package envisaging cuts worth €45bn by 2014 on Thursday.
A trade group representing Germany's family-owned businesses has criticised the German government's role in supporting eurozone bailouts, and has called for new rules to allow the exclusion or withdrawal of certain eurozone members from the currency union, Die Welt reports.
Ruparel: Comparisons between Greece and Lehman are “overblown”
Writing on the Guardian’s Comment is Free, Open Europe’s Raoul Ruparel argues that, while “there's no doubt that a Greek default would be incredibly painful”, comparisons between the Greek debt crisis and the Lehman Brothers collapse are “overblown”. He concludes, “Regrettably, politicians are using the misguided comparisons with Lehman Brothers as an excuse to ignore and perpetuate Europe's real problem: an unhealthy, undercapitalised banking system and a monetary union based on the premise that political leaders' commitment alone could make economic and democratic realities disappear.”
Writing for the FT, Peter Mandelson argues that, “The EU must step toward fiscal and political union.” Also in the FT, former Greek Finance Minister George Papaconstantinou argues for Greece to be given time to prove it can reform. Writing in Wirtschaftswoche, prominent economist Martin Feldstein argues that "the only thing which will help Greece is to leave the eurozone at a certain point.”
EU ministers yesterday agreed to a common EU patent, although Spain and Italy opted out of the deal. The UK Government said that British companies will see benefits of £20m a year.
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EUobserver reports that proposed new rules requiring MEPs to disclose how much they earn from second jobs make little distinction between high and low earners, and also place MEPs from newer member states at a disadvantage.
Writing on Conservative Home, George Eustice MP argues that, “It should become a key objective of British foreign policy to break the power of centralised European institutions like the European Court of Justice.”
In an interview in El País, Polish Foreign Minister Radoslaw Sikorski argues that “the EU needs military capabilities to support diplomacy.” Poland will take over the rotating EU Presidency on 1 July.
Writing in the Times, Ian King argues that the Bank of England must take a firm stand in EU discussions on how to implement Basel III rules on banking regulation.
On Conservative Home, the six Conservative MEPs first elected in 2009 reflect on their first two years in Brussels.
Austrian TV channel ORF reports that a secret decision taken by the EU Council of Ministers on 11 April would allow for the extension of exchanges of air passengers’ data to all intra-EU flights. The decision was supported by the UK, Ireland and Sweden, despite concerns by legal experts of the Council that it was illegal to do so.
In an opinion piece in El País, Jordi Vaquer of the CIDOB think-tank notes that at last week’s summit of EU leaders, the annex of the final communication declares the “importance of the Union for the Mediterranean,” which “highlights the emptiness of the statements about the political situation in a dozen Arab countries.”
Knack reports that the Western European Union (WEU) will be officially dissolved on Thursday.
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Greece is no Lehman Brothers
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