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Europe
Sunday Times publishes expenses report that the European Parliament tried to keep secret
In response to last week’s ruling by the European Court of Justice, the Sunday Times has published the internal expenses report that the European Parliament has refused to make public. Abuses include MEPs claiming up to £180,000 in annual staff allowances without receipts, MEPs awarding themselves bonuses of up to 1½ times their salaries and diverting public money into front companies. The ruling could force the disclosure of the names of the MEPs involved.
Sunday Times European Parliament Internal Report
Bundesbank Chief: Euro would be able to survive a Greek default
In an interview with Welt Am Sonntag, Bundesbank Chief Jens Weidmann suggested that the euro would survive a Greek default. Weidmann said although “it would surely put partner countries in a difficult situation…the euro would even in [the case of a Greek default] remain stable.” This runs against warnings by other ECB officials that a Greek default would be catastrophe for the single currency.
Meanwhile, the FT Weekend reported that French banks have agreed in principle to swap their current holdings of Greek debt for new bonds with longer maturities, as long as all other creditors do the same. The proposal, pushed by the French government, lines up with the ECB’s approach to private investor participation in dealing with the Greek crisis, but falls short of German demands for private investors to take a greater hit to ensure a longer term solution to the crisis. The two sides still look far short of a compromise. Despite this, HLN reports that European Council President Herman Van Rompuy has said that he is sure that a deal on the second Greek bailout will be agreed by the end of this month.
DAPD reports that the International Swaps and Derivatives Association (ISDA), which will determine if credit default swaps on Greece payout under various restructuring scenarios, has said that a voluntary debt rollover would not be judged as a default. Separately, international interest in purchasing state-owned companies in Greece, recently put up for sale under the new privatisation push, has been small or non-existent, reports Sveriges Radio.
Irish Independent Zerohedge FT Lex FT Weekend Observer FT FT 2 IHT HLN NRC Handelsblad Wirtschaftswoche DAPD Sveriges Radio
Persson: ECB contradicts itself over default
In a letter to the FT, Open Europe Director Mats Persson argues that ECB Board member Lorenzo Bini Smaghi’s claims that the cost of a Greek default would fall mainly on “the central bank of the country that defaulted”, is not only implausible but also runs contrary to comments by other members of the ECB Board. For example, Nout Wellink, Governor of the Dutch Central bank, told Dutch TV that the Netherlands would face losses of €4bn via the ECB if Greece were to default, suggesting the burden would be shared across the eurozone. Mats concludes: “This kind of contradiction from the ECB does not inspire confidence and is not what one would expect from the supposed heir to the trusted Bundesbank, which electorates were promised when the single currency was forged.”
Open Europe’s report on the exposure of the ECB to Greece and other peripheral eurozone economies continues to receive coverage. US financial magazine Barron’s, the Irish Times, French financial daily La Tribune and a comment piece in Dutch daily Trouw cite Open Europe’s estimates that the ECB has an exposure of €444bn to the PIIGS, while holding around €190bn of Greek assets. Barron’s quotes Open Europe Director Mats Persson saying, “The ECB's acceptance of risky paper, like Greek bonds and loans, is effectively transferring risk from investors to taxpayers, and from weaker, debt-challenged euro-zone economies to the richer economies, like Germany's.” Open Europe’s ECB report also featured in an article in Greek financial daily Isotimia.
Barron’s La Tribune Irish Times: McManus FT Letters: Persson Isotimia.gr Trouw: Schout
True Finns locked out of government talks over EU policy
Finland’s Prime Minister-elect Jyrki Katainen said over the weekend that he was aiming to finalise talks over a new six-party coalition government by the end of this week. The new coalition will not include the eurosceptic True Finns party, due to irreconcilable divergences over EU policy – including the eurozone bail-outs. True Finns leader Timo Soini told Finnish TV Yle: “It’s a disastrous European policy which has been pursued in Finland. The aim here is to continue with it, and we can’t accept it.”
Yle Deutsche Welle Helsingin Sanomat
EU countries look for loopholes in banking regulations
The FT reports that Germany and France are looking for loopholes within current banking regulations to mitigate the impact a Greek default would have on their banking sectors. Loopholes currently exist which allow national regulators to define what constitutes a default as well as defining a default as a failure to make payments for 90 days or more.
FT
Eurozone comment round-up;
FAZ: Saving Greece damages us
On the frontpage of FAZ, Senior Economics Editor Ranier Hank writes that “saving Greece is not a useful thing to do. It damages us.” He argues that “democracy is being gradually hollowed out”, noting that "Europe’s rescue started with a breach of law. And, as with Adam and Eve’s breach of law in paradise, one sin leads to many others.” “Where you find losers (democracy, the constitutional state and public support) you will also find winners. These are the centralists,” he concludes.
Hans-Olaf Henkel, former President of the Federal Association of German Industries, is quoted in Die Welt warning that “the euro threatens Europe.” “It is time for politicians to deal with the real causes of the misery: strictly sticking to a single euro for different economic cultures,” he notes.
In the Irish Times, Business Editor John McManus writes: “It is abundantly clear the financial transfers [in the eurozone] have already happened. However, for a variety of reasons the stronger members have declined to acknowledge that a point of no return on the road to a closer fiscal and political union has been passed.”
A leader in Dagens Nyheter argues that “the Greek debt will be written off sooner or later, which is why it is better to do it while there are still private investors to share the bill.” In the FT, Wolfgang Münchau argues in favour of creating a “miniature fiscal union” within the eurozone, and notes: “If we go down the route of permanent debt rollover, we will sooner or later arrive at a point where the periphery countries default – under my scenario. At that point, the creditor countries have to transfer billions of euros to the periphery. When that happens, I expect the pressure for greater centralisation to come from the creditor countries.”
Dagens Nyheter El País: Estefania WSJ: Mattich Irish Times: O’Brien Irish Times: MacCormaic Irish Times: McManus FT: Munchau FT: Editorial CityAM: Johnson FT Weekend FT Weekend 2 Observer: Stewart WSJ: Heard on the Street FAZ: Hank Welt Bild
Le Monde reports that credit rating agency Standard & Poor’s has said that France’s AAA rating could be at risk in the medium term if the French government fails to push ahead with reforms of the pension system and does not cut healthcare expenditure.
Le Monde
Portuguese TV RTP reports that the EU’s statistics office, Eurostat, has announced that Portugal has slipped into recession.
RTP
The front page of El País reports that Spanish Prime Minister José Luis Rodríguez Zapatero is considering calling early elections in November.
El País
Die Zeit: EU subsidies account for nearly half of German farmers’ income
An article in Die Zeit notes that, although prices for typical German agricultural products such as sugar-beets fell significantly, German farmers continue to experience a higher level of wealth, due to the fact that EU farm subsidies sometimes account for nearly half of the farmers’ income. Meanwhile, a separate article quotes UN Special Rapporteur on the Right to Food Olivier de Schutter arguing: “Especially the direct [farm] payments coming from Brussels have made crops, milk and meat so cheap on the world market that African farmers have no chance of competing with such low prices.”
Zeit: De Schutter Zeit
Independent: With the E.coli crisis the EU “notched up another failure”
A leader in Saturday’s Independent argued: “Already at sixes and sevens over euro bail-outs and migrants and Arab uprisings, the EU notched up another failure…As the number of E.coli cases declines, it is already clear that this has been more than a fatal outbreak of food poisoning, and the repercussions will be felt for a very long time.” Meanwhile, El Mundo reports that French Agriculture Minister Bruno Le Maire has insisted that compensation for European farmers damaged by the E.coli outbreak must be paid out exclusively via the EU budget.
Saturday’s Independent: Leader Le Monde El Mundo
In the Mail on Sunday, Peter Hitchens argued that a directive passed by the EU in 2004 now makes it considerably more difficult to be a blood donor as the National Blood Service now has a ban on anyone who recently travelled to the US.
Mail on Sunday: Hitchens
The Coalition has announced it will review its policy on recycling and is expected to backtrack on its pledge to reintroduce weekly rubbish collections. The review must ensure that the UK meets EU landfill targets.
Saturday’s Times Saturday’s Telegraph
In Saturday’s Telegraph, Charles Moore argued that the EU’s targets on renewable energy will not be met by the UK as prices continue to soar and “when, by 2015/16, some of our existing coal-fired power stations close down, there will be a panic about energy supply.”
Saturday’s Telegraph: Moore
EUobserver reports that EU Internal Market Commissioner Michel Barnier has called for research and development funding to be increasingly moved away from national governments and over to the EU.
EUobserver
High street brokers and big investors stand to profit at the expense of UK pensioners holding Bank of Ireland bonds as the EU’s Prospectus Directive prevents small investors from accepting a debt-for-equity swap, the FT Weekend reported.
FT Weekend
World
Outgoing US Defence Secretary Robert Gates gave a speech on Friday warning of the shortcomings of Europe’s military capacity, with particular reference to the current Libyan campaign. He argued that NATO is at risk if European members continue to refuse to take on more of their own security burden.
FT Weekend FT Weekend 2 Saturday’s Guardian BBC: Hewitt Economist: Charlemagne EUobserver
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