Despite the likelihood of a Greek default being declared, ECB President Jean-Claude Trichet came out in support of the package last night, saying, “Everything has been set up in order to face any eventuality”, although he refused to “pre-judge” the issue of a Greek default. Speaking after the Summit, French President Nicolas Sarkozy said the package agreed for Greece is “an exception”, stressing that similar deals will not be forthcoming for Ireland and Portugal. “Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government…The very words were once taboo…We have done something historic. There is no European Monetary Fund yet, but nearly”, he said. Luxembourg’s Prime Minister Jean-Claude Juncker said that this “is the last package.” Open Europe’s Raoul Ruparel appeared on BBC News and twice on LBC this morning discussing the second Greek bailout package. The Telegraph quotes Raoul saying "Eurozone leaders have still failed to address the underlying problem of Greek solvency". Raoul is also quoted in the Mail, Express and German business magazine Manager Magazin. Cameron and Clegg divided over opportunity to renegotiate EU terms? Eurozone comment round-up An editorial in El País argues that, “Europe has a serious deficit of institutions that are incapable not only of organising a quick financial intervention in times of emergency (the ECB can’t act in this way)…but also to convert big agreements, made at summits, into the necessary multiple and small commitments without tension between member states”. Writing in La Stampa, columnist Marta Dassù argues, “When the economic crisis in a country like Greece can drive the euro to the edge of the abyss, it’s clear that the European construction doesn’t work. And in fact, as the critics warned since the beginning, a monetary union cannot work without fiscal coordination and a common budgetary policy.”Open Europe Europe
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Friday 22 July 2011
Eurozone reaches deal on €109bn second Greek bailout;
€37bn to be raised from private sector
Eurozone leaders agreed on a new €109bn bailout for Greece last night. The loans will be provided by the eurozone bailout fund, the EFSF, and the IMF, while the agreement also estimates that €37bn will be raised from private sector involvement (through a bond swap or rollover) - Reuters reports that this is equal to a 21% loss on private sector holdings. The agreement also estimated that the private sector involvement up to 2019 will be €106bn net. This move is likely to be declared a default by the main credit rating agencies. To counter the impact of this, it was also agreed that the scope of the EFSF should be widened so that it can issue “precautionary lines of credit”, aid in the recapitalisation of struggling banks and purchase government bonds on the secondary market. Loans from the EFSF will also have reduced interest rates and longer maturities – which also will be applied retroactively to the bailouts of Ireland and Portugal as well. The FT reports that the combined measures are expected to cut Greek debt by €26bn by 2014.
German MPs Frank Schaeffler (FDP) and Klaus-Peter Willsch (CDU) have demanded that the Bundestag should come back from recess for a special session to discuss the deal, suggesting that German Chancellor Angela Merkel violated the mandate for negotiation she was given by the Bundestag by allowing the EFSF to be used to purchase Greek debt. Focus quotes Sigmar Gabriel, leader of German opposition party SPD saying, "What has been decided…only means that we're giving more loans. But it won't change anything to the fact the Greeks are not able to carry this gigantic mountain of debt”.
FT EurActiv European Voice FT 2 FT 3 FT 4 FT 5 FT 6 European Voice 2 Liberation IHT Le Soir Mail Sun BBC EUobserver EUobserver 2 EUobserver 3 Le FigaroTelegraph Times Independent Independent 2 Times 2 FAZ Handelsblatt TF1 Libération Le Figaro 2 Guardian Guardian 2 Guardian 3 Guardian 4 El Pais El Pais 2El Pais 3 El Pais 4 El Pais 5 Bloomberg Telegraaf Elsevier: Joosten Focus Bloomberg 2 DTS Stern Morgenpost Irish Independent Irish Independent 2 Irish Independent 3 BBC 2 BBC 3 City AM City AM 2 Les Echos Les Echos 2 Telegraph 2 Independent 3 Irish Times Irish Times 2 Irish Times 3 Irish Times 4 FT MailTelegraph Express Manager Magazin Portfolio.hu Correio do Brasil Terra Brasil Spiegel Rheinische Post Handelsblatt Der Spiegel FAZ
Several UK newspapers note that David Cameron and Nick Clegg look set to clash on whether Britain should exploit the crisis in the eurozone to win concessions from its European partners in areas such as financial services, employment law and the EU budget. The Guardian quotes Clegg saying, “I don't think it helps at all, when we are looking forward at trying to work out what comes out of the discussions on the reform of the eurozone, to prioritise what we think we can kind of get out of it.”
Following George Osborne’s comments that greater eurozone integration is “necessary to make the single currency work” and “very much in our national interest”, the FT quotes Open Europe saying, “If it’s going to encourage further eurozone integration, the government must be absolutely clear about its vision for the UK’s future relationship with a fast-changing Europe. This should include a clearly defined list of powers that it wants returned from Brussels to Westminster.” TheTimes’ Sam Coates notes that, “Yesterday Downing Street and Treasury briefings suggested the redrawing of the working of the European Union means an attempt to return powers in three areas: financial services regulation, health and safety laws and the working time directive.”
Open Europe press release FT Times: Coates Times: Redwood Economist: Bagehot's notebook Conservative Home BBC: Today BBC Guardian
The FT notes that Internal Market Commissioner Michel Barnier has revealed that under new EU regulations seeking to harmonise capital rules across the EU, the UK will still have the flexibility to ring fence its retail banks and impose extra capital requirements on them.
Speaking on the BBC’s Today programme, former Deputy Governor of the Bank of England Sir John Gieve argued that the deal reached yesterday “isn’t the last word. We will be back on this subject again in the autumn.” In French financial daily Les Echos, Editor-in-Chief Dominique Seux argues, “Repeating ‘Europe, Europe’ doesn’t mean anything, in the cruel words of General De Gaulle, when the majority of the peoples resist greater integration. French elites should remember the divorce that took place in 2005. However desirable, the great federal dive all at once is, for the moment, a myth…The fact remains that the way Europe currently works, crisis-by-crisis, cannot last long.”
An editorial in the WSJ argues, “A European Marshall Plan for Greece…sounds like a colossal waste of EU taxpayer money—Greece's problem in recent years has not been insufficient amounts of wasteful government spending, and no government in Europe has money to burn on more of the same. Greece needs pro-growth economic reform, not another helping of warmed-over Keynesianism”. Writing in the Telegraph, columnist Ambrose Evans-Pritchard argues, "The mix of lower rates and a debt restructuring of up to €120bn for Greece changes the outlook dramatically. The EU medicine of austerity without any relief over the past 18 months has clearly failed. It has taken the country to the brink of civil disorder and caused the debt trajectory to spiral towards 160% of GDP."
La Stampa: Dassù Telegraph: Evans-Pritchard El Pais: Torreblanca El Pais: Editorial El Pais: Sotelo Economist: Charlemagne Economist: Buttonwood WSJ: Editorial WSJ: Heard on the Street Economist Economist 2 Guardian: Elliott Guardian: Pratley Guardian: Jenkins Times: Leader Times: Fleming Telegraph: Warner Telegraph: Oborne Conservative Home: Flight Courrier International: Furedi FT Editorial BBC: Hewitt Economist blogs: Charlemagne City AM: Heath Le Figaro: Rousselin Le Monde: de Boissieu & Lorenzi Le Monde: Salavert Les Echos: Seux BBC: Today BBC: Today 2 La Stampa: Dassù Le Monde: de RoseStandard: Mayer FTD Leader
Bulgarian Finance Minister Simon Djankov told Reuters that Bulgaria is rethinking its bid to join the eurozone until the crisis is properly ironed out, saying, "We want to know before we join the eurozone what the opportunities are and what the burdens are. The crisis in Greece and other countries has made us wary of the club that we want to join and the implications of joining it."
FT Deutschland revealed together with independent Austrian MEP Martin Ehrenhauser that ‘confidential’ EU projects increased by 464% between 2007 and 2010. He accuses the Commission of labeling controversial projects as confidential, to avoid inquiries. The Commission claims it to be an ‘administrative error’ that has mistakenly classified transactions as confidential.
EUobserver reports that Spain is today ready to approve a temporary measure that will restrict the access of Romanians workers on its labour market in an effort to combat its unemployment rate which currently stands at 21%.
Euractiv claims that steelmakers yesterday commenced legal action against the EU over the way the sector has been included in the European Union’s carbon market.
Reaction to draft EU summit proposal
Otto von Habsburg: Hail a true European
Posted by Britannia Radio at 14:16