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Moody’s: Greece faces 50% risk of defaulting

Pressure is mounting on Greece after Moody’s further downgraded its credit rating into junk status and maintained its negative outlook. FT Alphaville notes that Moody’s have said the risk of Greece defaulting is now 50-50 over the next five years.

The Telegraph notes that German ministers have been forced to reassure markets that the EU, IMF and ECB will see through the €110bn bailout, following reports that the IMF would withhold its share of the next €12bn payment due on 29 June, unless a long-term plan is put in place to finance Greece through the next year. Ta Nea reports that Greek Prime Minister George Papandreou will meet with Euro Group Chairman Jean-Claude Juncker in Luxembourg tomorrow to discuss the release of the funds.

However, the IMF’s decision to release further funds is more likely to rest on a second Greek bailout, which most believe is now necessary to guarantee the country is financed for the next year, or possibly two. Bloomberg quotes EU Economic and Monetary Commissioner Olli Rehn saying, “We are also examining the feasibility of voluntarily rescheduling [for Greece], which would not create a credit event”. Officials believe some form of private sector involvement would make it easier for German Chancellor Angela Merkel to secure parliamentary support for a new bailout.

In an interview with Italian daily Il Sole 24 ore yesterday, ECB executive board member Jürgen Stark said the ECB could back plans for a voluntary rollover of debt, where Greece’s deadline for repaying its debt is simply extended, but would not support a “rescheduling”, which would see interest rates cut, leading to loses for investors; a move which would be “perceived as a sovereign default or a partial sovereign default.”
Il Sole 24 ore MA Handelsblatt Nea Kathimerini Capital Telegraph FT Ta Nea Kathimerini eKathimerini Naftemporiki WSJ: Smith FT Irish Independent Irish Independent: O’Callaghan El Pais El Pais 2 Times Telegraph FT: Alphaville Irish Independent Irish Times Irish Times 2 SVD Irish Times 3 WSJ Les Echos FT: Smaghi FAZ: Mussler Les Echos Irish Times Expresso Irish Times

€7.5m spent by EU Commissioners on private jet travel

Research conducted by the Bureau of Investigative Journalism reveals that more than €7.5m was spent on private jet travel for EU Commissioners between 2006 and 2010, €20,000 was spent on gifts since 2008, including cufflinks, fountain pens and Tiffany jewellery, and €300,000 was spent on cocktail parties. During a four-day stay at a five-star hotel in New York, Commission President, Jose Manuel Barroso and 35 staff members ran up a bill of €28,000.

The Telegraph quotes Open Europe Director Mats Persson saying, “With the public mood in Europe turning increasingly hostile to the EU, the Commission would do itself a huge favour by putting an end to this kind of excessive spending. Revelations about EU waste have become almost routine, but that doesn’t make them anymore acceptable.”
Express Telegraph Sun Guardian Mail

Spain calls for compensation from Germany over the ‘cucumber crisis’

Spanish Prime Minister José Luis Rodríguez Zapatero has criticised Germany and the European Commission over its handling of the so-called ‘cucumber crisis’ and confirmed that it will seek “sufficient compensation” following the Hamburg state government ministry’s public allegation that Spanish cucumbers are the source of the recent outbreak of E coli, reports EFE. Germany and the Commission have now withdrawn the allegation. Russia has now banned imports of all fresh vegetables arriving from the EU, reports El Pais.
Politiken EFE El Pais IHT Irish Times

According to Yle, Government negotiations are back to square one in Finland as the Social Democrats and the Left Alliance yesterday walked out of talks when the six-party coalition could not agree on differences over job creation and economic growth. True Finns leader Timo Soini said that he is prepared to speak with coalition leader Katainen, however stated that his terms regarding EU bailouts had not changed.
Newsroom Finland Yle Helsingin Sanomat Helsingin Sanomat2

The WSJ reports that the European Banking Authority will delay the latest round of stress tests until July as banks must resubmit data which is suspected of being overly optimistic.
WSJ FT

An editorial in the FT criticises European Commission plans to implement Basel III capital rules for the banking sector through a Regulation rather than a Directive, arguing: “The EU’s main argument is that member states cannot be allowed to apply their own capital requirements because if some set higher standards than others, banking would shift to those that applied only the minimum, creating dangerous concentrations of risk. However this is not an argument for harmonisation. Rather, it is one for an adequate minimum standard.”

FT: Editorial WSJ: Barnier

EurActiv France reports that, in an opinion released on Tuesday, the European Data Protection Supervisor Peter Hustinx has concluded that the EU’s Data Retention Directive “cannot continue to exist in its present form” because it “does not meet the requirements imposed by the rights to privacy and data protection.”
EurActiv France EDPS opinion

In a recent report, the European Parliament has called upon the Commission

to compile an overall audit of all development projects financed by the European Investment Bank (EIB), following concerns over fraudulent activity, reports New Europe. The article reports that millions of EIB funds are suspected to have been handed to dubious private equity funds and banks in Nigeria.
New Europe

A report by the World Bank claims that the international market in carbon credits, established under the Kyoto protocol, has suffered an almost total collapse with only $1.5bn of credits traded last year - the lowest since the market opened in 2005.
Guardian

A leader by FAZ editor Hendrik Kafsack argues for CAP reform noting that "none of the arguments of the farmer's lobby stands up to scrutiny…studies have shown that German farmers earn above average income".
FAZ

In an interview with Le Figaro, French Europe Minister Laurent Wauquiez has said that EU enlargement “is not an endless process”, adding: “The EU does have frontiers. These are the borders with Turkey, Morocco and Tunisia. We won’t go beyond that.”
Le Figaro: Wauquiez

Europe will risk “a further relative decline in the world” if it does not remove barriers that prevent foreign groups from investing on the continent, said Karsten Langer, the new Chairman of the European Private Equity and Venture Capital Association, according to the FT.
FT

Belgian business magazine Trends highlights a report by French investment bank Natixis which claims that "the solvency of the French state is being endangered in the long term", warning for "accelerated de-industrialisation" which "will force France to have to finance itself abroad more and more, threatening its solvency in a structural way."
Trends

New on the Open Europe blog

Draghi will face a 50% pay cut when he takes over the ECB Presidency: You don’t hear this every day
Open Europe blog