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Juncker: Second Greek bail-out deal agreed ‘in principle’;
16 MPs from Greek PM’s party challenge new austerity programme
Eurogroup Chairman Jean Claude Juncker has said that a second Greek bail-out has been agreed in principle and that a formal deal is expected “before the end of this month.” The decision on more aid will be made after the report on Greece's progress is concluded by the IMF, ECB and European Commission, which “will come out in the coming days,” Juncker said. European officials met in Vienna yesterday to discuss the details of the new loans, which are expected to be finalised at a meeting of EU finance ministers on 20 June.

There are few details about the form of a second bail-out. However, Kathimerini reports that sources close to the talks have suggested that the EU and IMF is expected to provide €30bn-€40bn, privatisations are expected to bring in €25bn and about €20bn is to come from the private sector via voluntary debt ‘re-profiling’. EU and IMF officials are also expected to issue a statement today saying that approval of further funding for Greece is a prerequisite for the next €12bn tranche of the first €110bn Greek bail-out.

Reuters quotes ECB Vice-President Vitor Constancio saying the ECB does not rule out private sector involvement in a new deal to aid Greece but is firmly opposed to outright debt restructuring. “Some forms of private sector involvement which are voluntary – there are many forms – and some forms we have always admitted as possibilities,” he added.FAZ notes that German banks have warned that even a “soft restructuring” would lead to many banks refusing to lend to other weak eurozone members, which could prevent Ireland and Portugal returning to the markets for years.

Greek Prime Minister George Papandreou is due to present a tough new economic reform package to Juncker in Luxembourg today in his bid to secure the second bail-out. Papandreou’s proposed measures are expected to include an extra €6.4bn in tax increases and spending cuts this year, accelerated privatisations of state-owned utilities and cuts to thousands of jobs in the public sector. Kathimerini reports that a group of 16 MPs from Papandreou’s governing PASOK party has threatened to withhold support for the new reform package if sufficient time is not granted to debate it in parliament. Papandreou’s government only has a six-seat majority.

A leader in Handelsblatt describes the bail-outs as “Europe's poisoned aid”: “Many Greeks feel the urgent austerity is externally prescribed punishment. But only if the attitude of the Greeks changes will the Herculean task of Papandreou have any chance of success.”

Greek 10-year bond yields rose 10 basis points to 16.25% yesterday on uncertainty over whether Athens would restructure its debt, the Irish Times reports.
Bloomberg Reuters GuardianKathimerini Reuters 2 WSJ Kathimerini 2 Les Echos Les Echos 2IndependentFTEuropean VoiceWSJ: FidlerWSJ: Editorial Economist Irish Times Irish Times 2 Irish Times 3 Irish Times 4 Irish Times 5 Eleftherotypia  Vima Nea Capital Naftemporiki Handelsblatt: Leader Handelsblatt Handelsblatt 2

Three days ahead of Sunday’s general elections in Portugal, the centre-right Social Democratic Party is ahead in the polls with 36% of support, followed by the incumbent Socialist Party with 31%, reports El País.
WSJ El Pais

Outgoing ECB President proposes single EU finance ministry
In a speech yesterday, outgoing ECB Chief Jean-Claude Trichet said: "In this union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market and a single central bank, to envisage a ministry of finance of the union?" Trichet also argued that “confronting the challenges of the future requires strengthening the institutions of economic union”, floating the idea of giving EU authorities "the right to veto some national economic policy decisions.”

An article in the Telegraph notes that, in his remarks, Trichet did not distinguish between the eurozone and the EU as a whole, and quotes Open Europe Research Director Stephen Booth saying: "Greater fiscal union in the eurozone would have a big impact on the UK – if decisions on competition or specific sectors were made in Europe, it would affect us."

A leader in FAZ argues that Trichet’s proposals go so far "that member states which will need to give up their sovereignty will ask themselves what will remain of their democracy and popular sovereignty. Almost nothing. Is that the price to be paid for the euro?" In Le Figaro, Yves Thréard notes: “According to [Trichet], the creation of a European finance ministry would make it easier to keep the eurozone in order. One can however doubt it, given that [European Council President] Herman Van Rompuy, [EU Foreign Minister] Catherine Ashton and [European Commission President] José Manuel Barroso do not prevent divisions and disagreements on the other fronts.”
Independent: Prosser ES Le Figaro: Thréard Le FigaroLes EchosIrish TimesMail Mail: Sutherland Times WSJ WSJ: Analysis FT Telegraph Telegraph: Balls IHT El Pais Guardian Expresso Sveriges Radio FAZ: Leader Open Europe blog

Open Europe’s Director Mats Persson appeared on BBC Newsnight yesterday discussing the problems of waste and excessive spending in the EU budget, arguing that the EU institutions have a desire to be “seen as important” which causes them to spend money on institutions, gestures and symbols “rather than policies and solutions that citizens have actually asked for.” Open Europe’s Stephen Booth appeared on the CNNdiscussing the topic.
Newsnight TVI24 Jornal de negócios

The Mail reports on the Heritage Foundation’s study calling for the US Congress to investigate EU advocacy in the US. Open Europe Research Director Stephen Booth is quoted saying, “The EU has absolutely no mandate to wade in to politically sensitive debates in the US.”
Heritage Foundation Mail

FT Deutschland reports that, after China and the US, Russia is also opposing EU plans to force all airlines operating in Europe to pay for 15% of their CO2 emissions, starting from January 2012. The article notes that the proposed measures would cost Lufthansa alone between €150m and €350m per year. The Russian government is now threatening to make flying over Russia more expensive or even disallow it.
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The Telegraph reports that the European Commission has come under fire for giving a £3.5m grant to a charity controlled by the daughter of Uzbek autocratic leader Islam Karimov. The article notes that the EU imposed economic sanctions on Karimov’s regime following the massacre of hundreds of protesters in the town of Andijan in 2005, but has now begun a process of rapprochement.
Telegraph

According to Sveriges Radio, German Chancellor Angela Merkel has promised compensation for the Spanish farmers who are suffering losses after German officials blamed Spain for the spread of a deadly bacterium in cucumbers.
Sveriges Radio

The Independent reports that the EU has backtracked on its plans to give Twinings a £10.5m grant to open a plant in Poland, following complaints that the company was looking to relocate work there from the UK rather than make a new investment.
Independent

UK MPs are calling for urgent changes to the Government’s approach to fishing quotas. Under the current system, fishing quotas can be held by inactive or retired fishermen, or organisations that do not fish, but trade quotas as a commodity. They are also calling for an end to the “unsustainable practice” of fish discards, as determined by EU rules.
BBC: Today

A leader in the Economist argues that “the EU should get on with admitting the better-run countries from the Western Balkans.”
Economist: Leader Economist: Charlemagne

New on the Open Europe blog

Trichet: I have a dream (an EU finance minister)
Open Europe blog