EU/IMF official: Greece to miss 2011 deficit target Reuters cites an EU/IMF official involved in assessing the Greek economy, suggesting that the larger than expected recession is not the sole reason for missing the target, as the Greek government argues, since the government has failed to fully implement the fiscal consolidation plan and the revenues from the privatisation plan look unlikely to be realised, especially in the short term.
Lower house of Spanish Parliament gives green light to constitutional deficit limit
Eurozone comment round-upOpen Europe Europe
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Friday, 2 September 2011
Bild: Schäuble calls for new EU Treaty;
Weidmann: ECB bond buying has “strained the framework of the currency union”
Bild reports that German Finance Minister Wolfgang Schäuble told a meeting of senior CDU members that a new EU Treaty is needed to transfer further economic and financial policy powers to the eurozone level. Schäuble is quoted saying that such a move would be necessary "even when we know how difficult a treaty change is." In Hannover yesterday, Bundesbank President Jens Weidmann furthered his criticism of the ECB and eurozone leaders, suggesting that the ECB’s bond purchases have "strained the existing framework of the currency union and blurred the boundaries between monetary policy and fiscal policy”, according to Handelsblatt. He added that any future plan for solving the debt crisis must ensure that “sufficient incentives for sound public finances exist” within the eurozone, a veiled criticism of Eurobonds.
A separate article in Handelsblatt reports that yesterday, during a visit to Berlin, Portuguese Prime Minister Pedro Passos Coelho said that "Eurobonds are not at all a solution for the problems we are facing today", adding that Eurobonds would necessitate a common EU Finance Ministry, “which would of course be a political revolution against national sovereignty.” Meanwhile, De Volkskrant reports that Dutch Finance Minister Jan Kees de Jager has said that France and Germany are to be blamed for the eurozone crisis, since, by allowing their budget deficits to surpass 3% of GDP, they “have opened the door for other countries” to ignore the rules of the Stability and Growth Pact.
66% of Germans oppose bailouts;
47% of Finns think euro has done more harm than good, down from 71% a year ago
According to a series of Deutschlandtrend polls conducted by ARD, only 35% of Germans accept “limited” versions of Eurobonds, with 55% opposing them. 66% do not support stronger eurozone countries providing credit guarantees for weaker ones, while 80% believe that “the worst of the euro– anddebt – crisis is yet to come.” 64% support “more common policy making in Europe over the next few years” (mehr gemeinsame Politik in Europa). However, the question does not mention the EU and does not ask whether respondents agree that powers should be transferred to the EU institutions. Answering a separate question, 53% of respondents said they were opposed to the idea of “United States of Europe”, with only 42% in favour.
Meanwhile, a poll conducted last week by Taloustutkimus Oy for Finnish business magazine Talouselämä shows that 49% of Finns are opposed to Finnish participation in EU emergency aid to Greece, while only 34% support the EU bailout. The same poll showed that 47% of Finns think the euro has done more good than harm, down from 71% in a Eurobarometer poll a year ago. Open Europe’s Director Mats Persson was interviewed for a podcast by the Guardian, arguing that the support for the EU is dropping across Europe, in the wake of the eurozone crisis.
The WSJ reports that, according to Greek officials referencing a recent report, the Greek deficit could top 8.5% of GDP this year, substantially above the target of 7.6%, while there are fears that not enough money will be raised from privatisations. This raises doubts over whether Greece will receive the next tranche of bailout aid this month. Greek Finance Minister Evangelos Venizelos rejected the findings of the report, saying, “The budget office does not yet have the knowledge and experience needed for its task.” In protest to these comments, the head of the committee which produced the report resigned.
Meanwhile, the EU/IMF/ECB officials who were conducting the fifth official review of the original Greek bailout and the Greek economy have temporarily left Athens to allow the Greek government to “complete technical work…related to the 2012 budget and growth-enhancing structural reforms.” The so-called ‘troika’ will return in mid-September to complete the review, although it’s not clear if this will delay the disbursement of the next tranche of Greek bailout funds.
Dow Jones WSJ Irish Times Irish Times 2 WSJ 2 EUobserver Reuters 2 Reuters 3 FT Economist EurActiv FT 2 FT 3CityAM Independent IHT FT 4 Economist 2 Irish Times 3 Times Irish Times 4 ECB press release
The lower house of the Spanish Parliament has today adopted the constitutional amendments introducing deficit and debt limits. The amendments will be voted on by the Spanish Senate on Wednesday, reports El Mundo. Separately, El Paísreports that in yesterday’s €3.6bn auction of five-year Spanish bonds, demand was substantially weaker than expected, despite continued ECB purchase of Spanish bonds keeping the yields down. Le Figaro reports that French Prime Minister François Fillon will start consultations on the introduction of a balanced budget rule in the French Constitution next week.
Meanwhile, yesterday the Italian government submitted its changes to the latest austerity package to the Italian Senate’s Budget Committee. It remains unclear how the Italian government intends to cover for the removal of the tax on high incomes for private sector workers and the reduction of cuts to local administrations, except for a vague commitment to tighten surveillance on tax evaders.
Süddeutsche Zeitungreports that France is ready to give in to calls by the European Parliament and the ECB for quicker sanctions – decided by a simple majority vote by EU finance ministers – against countries that break the 3% deficit limit enshrined in the EU’s Stability and Growth Pact.
Commissioner considers plan to make future oil and gas deals with third countries go via Brussels
On his Straneuropa blog, La Stampa’s Brussels correspondent Marco Zatterin reports that EU Energy Commissioner Günther Oettinger may next week propose that in future all oil and gas contracts between EU member states and third countries be examined at the EU level before they are concluded. The article notes that Germany has probably been lobbying for this proposal, due to fears of lagging behind France, the UK and Italy in striking deals with the new Libyan government.
Meanwhile, following yesterday’s conference in Paris, competition has kicked off among countries that participated in the military operations in Libya to secure energy deals with the new Libyan government. In an interview with RTL, French Foreign Minister Alain Juppé said it was “logical and fair” that countries which offered the biggest support to Libya’s National Transition Council received a preferential treatment. On the BBC’s Today programme, David Cameron noted, “I think there’s a big danger today actually of people in the West taking too much credit for themselves.”
WSJ EUobserver EUobserver 2 Independent El País Le Figaro Guardian EurActiv WSJ Brussels Beat RTL: JuppéStraneuropa BBC Today: Cameron FAZ
In an op-ed in Le Monde, former French Economy Minister Thierry Breton notes, “Latin Europe is now under the markets’ surveillance. France is not there, but everyone knows that we need to choose which side we are on…because 2013 will be the year of a major rendez-vous. By then, our country will effectively become the world’s biggest issuer of debt in euros, ahead of Germany and Italy.”
The Economist’s Charlemagne argues that with the eurozone crisis, “the limits of [Jean] Monnet’s method [for European integration] are being reached. Governments are running out of modest steps that can be passed off as technocratic fixes. Short of an unexpected change in the markets, or a sudden return to growth, they must confront a fundamental political decision: if the euro area wishes to avoid the nuclear option of complete disintegration, it will have to make the leap towards fiscal union. Once this decision is taken, other arguments over, say, Eurobonds might be settled. Either way, it is time to set Monnet aside. Tell voters what the real choices are.”
Independent: Chu Le Monde: Breton FT: Editorial WSJ: Cottle WSJ: Heard on the Street Economist: Charlemagne
French daily Le Monde is claiming that France’s counter-intelligence service illegally tried to identify the sources contacted by Gérard Davet, one of the two Le Monde journalists who yesterday published a book accusing French President Nicolas Sarkozy of accepting illegal funding from L’Oréal heiress Liliane Bettencourt during his electoral campaign in 2007.
A leader in the Telegraph argues, “As our eurosceptic Chancellor finalises the details of another new growth package, we suggest that he defies the EU, and insists that the [EU’s Agency Workers] Directive’s implementation be delayed or abandoned, for the sake of British jobs and businesses. In such dangerous times, extreme measures are sometimes called for.”
EUobserver reports that EU member states are split over backing Palestine’s bid to upgrade its status at the United Nations, with pro-Israel countries such as Germany and Italy calling for a return to Arab-Israeli peace talks instead.
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