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Eurozone leaders reach agreement but vital details remain unclear;
Greek bondholders agree to a 50% write-down
Early this morning, eurozone leaders finally reached an agreement on a 50% write-down for Greek bondholders, allowing them to finalise the summit deal, which led to a positive response in the markets today. However, details of the deal were still thin on the ground with no information on how the write downs will work in practice or what the total value of the private sector contribution will be. The revised second Greek bailout will total €130bn, with €30bn earmarked as “sweeteners” for those private investors that contribute to the bailout, this could take the form of collateral (as was envisaged under the original second bailout deal) although again it is yet to be clearly defined. Under this plan, given the EU/IMF/ECB troika calculations, Greece is expected to have a debt-to-GDP ratio of 120% in 2020, while the troika is also expected to have a permanent representation on the ground to monitor the Greek economy. Slovakia will be exempt from increasing its contributions under the revised version of the second Greek bailout.

The rest of the deal included the plans to leverage the fund by “four or five times” by providing “risk insurance” on new issues of peripheral sovereign debt and setting up a special investment fund to attract foreign private and public investors. The total size of the leveraged fund is unclear, as it depends on the remaining funds in the eurozone bailout fund, but is reported to be around €1trn. The bank recapitalisation was also included in the deal and is expected to total €106bn, although much is expected to be raised from the private sector or to come from existing bailout packages. Interestingly, the plan did not clearly outline the IMF contributions to any of the funds or the second Greek bailout.

YLE reports that Finnish Prime Minister Jyrki Katainen was hesitant over the deal’s success saying, “I can’t say if Europe has been saved, but let’s hope so.” Meanwhile, earlier in the day, German Chancellor Angela Merkel gained support for the planned deal from MPs in the Bundestag, and issued a stark warning saying, “No one should take it for granted that there will be peace and affluence in Europe in the next half century…If the euro fails, Europe fails.” Despite the vote easily passing in the Bundestag, 15 members of the governing coalition did rebel, meaning the government was one vote away from having to rely on opposition support.

On the BBC’s Today programme this morning Chancellor George Osborne reiterated that the UK would not contribute to the second Greek bailout, other than through the IMF, and also that it would not be investing in the special fund set up to leverage the eurozone bailout fund. The Guardian notes that Cameron told Germany not to rule out a role for the ECB in guaranteeing the eurozone bailout fund. Open Europe’s briefing on what the expected deal could look like was covered on Zerohedge and Business Insider yesterday, and was cited by AFP and the Telegraph’s live blog.
FT CityAM WSJ WSJ 2 European Voice Irish Times Welt SZ IHT Irish Independent Independent BBC Coulisses de Bruxelles Les Echos 2 Les Echos 3 Telegraph EUobserver El País 2 Guardian Guardian 2 Times BBC 2 Le MondeTimes Times 2 Times 3 Mail Telegraph 2 Telegraph 3 FT 2 CityAM 2 FT 3 CityAM 3 WSJ 3 Pravda Sme Hospodarske Noviny Slovak Spectator FT 4 FT 5 FT 6 EUobserver 2 EUobserver 3 Independent 2 Guardian YLE HS Eduskunta FTDRadio 1 FT Deutschland NOS TV Volkskrant La Tribune Le Figaro Les Echos El País Expansión

The Irish Independent reports that Irish Prime Minister Enda Kenny was forced to admit to the parliament yesterday that he now believes some of the changes agreed over the past few days could lead to amendments to the EU treaties that would require a referendum in Ireland.
Irish Independent

Berlusconi’s letter makes “good impression” in Brussels but attracts criticism in Italy
Italian Prime Minister Silvio Berlusconi yesterday sent a letter to his European counterparts outlining a set of new austerity measures and economic reforms his government intends to implement over the next months. The letter mentions plans to raise the retirement age to 67, a sale of state assets expected to raise €5bn a year over the next three years, the abolition of a number of tax reliefs due to raise €20bn a year from 2014, a series of constitutional reforms and a commitment to increasing the flexibility of Italy’s labour market.

Polish Prime Minister Donald Tusk – whose country holds the rotating EU Presidency – said that the letter “made a very good impression” on EU leaders.” Il Corriere della Sera reports that Italian Economy Minister Giulio Tremonti did not sign the letter.

La Stampa’s columnist Stefano Lepri argues, “[Berlusconi’s] letter reveals its own limits, when it makes a wordy list of measures which have already been agreed but have not yet been implemented due to the lack of political consensus.” Separately, speaking on Italian public broadcaster Rai Uno’s Porta a Porta programme, Berlusconi urged Italy’s ECB Executive Board member Lorenzo Bini-Smaghi to step down to avoid troubles with France. The move reportedly annoyed French President Nicolas Sarkozy.
Corriere della Sera 2 Berlusconi’s letter Il Sole 24 Ore La Stampa 2 Repubblica Repubblica 2 FT WSJ EurActivHandelsblatt EUobserver Corriere della Sera La Stampa Corriere della Sera: Sensini Corriere della Sera : Polito Il Sole 24 Ore: Bufacchi Il Sole 24 Ore: Napolitano Il Sole 24 Ore: Bastasin Il Sole 24 Ore: Gentili La Stampa: Rusconi La Stampa: Sorgi La Stampa: Lepri Times: Leader Corriere della Sera 3

Iain Duncan Smith threatens to quit if forced to second vote against EU referendum
The Mail reports that Work and Pensions Secretary Iain Duncan Smith has threatened to quit the Government if forced to vote a second time against a referendum on the UK’s EU membership. Meanwhile, the Independent quotes Lord Ashcroft warning that Europe could cost the Conservatives the next election.

Separately, in the Spectator, James Forsyth, makes an analysis of the Conservative strategy in the wake of the rebellion in Parliament over a motion for a referendum on EU membership, arguing that “the events of the past few days have tipped the balance in favour of a more explicitly eurosceptic position”, and that David Cameron needs to improve his relationship with his parliamentary party.

Noting that the Conservative leadership is developing a plan for how to “renegotiate for jobs”, James reports that Open Europe will soon be publishing research showing that negotiating opt-outs from EU social policy would give a large boost the economy, and argues that “the Tory leadership also calculates that it will be harder for [Nick] Clegg to spend political capital trying to block attempts to claw powers back from Brussels if the rationale behind them is to get the economy going.”
Independent FT FT: Martin Irish Times: Hennessy Mail New Statesman: Norman Guardian

Johan Van Overtveldt, Editor-in-Chief of Belgian magazines Knack and Trends, has recently published a new book, “The end of the euro”, in which he concludes that “either the European Monetary Union transforms itself fundamentally or it disintegrates, with the latter outcome more likely.”
Knack Van Overtveldt: The End of the Euro

Sir John Major: “UK will not be alone” in attempting to repatriate powers from emerging federal eurozone
In the FT, Sir John Major argues, “If the eurozone integrates and co-ordinates policy, non-euro members may co-ordinate too. Confrontation looms. Deeper eurozone integration may encourage non-euro member states to seek to repatriate key policies they can’t influence. The UK will not be alone in this. In the next decade, a federal eurozone will change Europe’s mosaic.”

Speaking on the BBC’s Today Programme, George Osborne said,“It is clear the eurozone need to coordinate more closely…[This] is an opportunity for Britain to rebalance its relationship with Europe, that's in the coalition agreement of this Government, and Conservative members of it are also very clear it is an opportunity to bring back significant powers to Britain from Brussels.”

Writing in the Telegraph, Gisela Stuart MP advises David Cameron to “be prepared for full treaty negotiations, in the full knowledge that they will consume an enormous amount of time and political capital…the overwhelming focus must be on the economy, not least because the UK will only have clout in Europe when we are economically successful.”
FT: Major Telegraph: Stuart Times: Aaronovitch Guardian: Leader Guardian: Elliott Guardian: Garton Ash WSJ: Smith & Murray WSJ: Mattich Irish Independent: Keenan Independent: Hamilton BBC: Hewitt BBC: Mason BBC: Peston BBC: Robinson City AM: Heath Spectator Coffee House: Nelson Spectator Coffee House: Hoskins Welt: Poschardt Les Echos: Barré Sueddeutsche: Hulverscheidt Welt: Lachmann

MEPs yesterday endorsed an inflation-busting 5.2% increase (£5.7bn) in next year’s EU budget. Open Europe's Director Mats Persson is quoted in the Telegraph noting that the vote shows the double standards of MEPs at a time when the EU is demanding deep cuts in the public spending of countries like Greece and Italy.
Mail BBC Telegraph

FT Deutschland reports that EU Transport Commissioner Siim Kallas is due to propose new rules to limit aircraft noise by the end of November. The article notes that the plan has attracted criticism from the German Aircraft Association.
FTD

The Times notes that Britain will overtake Germany as the EU country with the biggest population within a generation, according to figures published yesterday.
Times

New on the Open Europe blog

Cool heads and clear minds: Sir John Major’s instructive analysis of what greater fiscal integration in the eurozone could mean for the UK and other non-euro countries
Open Europe blog

Berlusconi’s letter: What’s in it?
Open Europe blog

Q&A: What could tonight’s eurozone summit agreement involve?
Open Europe blog