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New on the Open Europe Blog Spanish government vs Spanish regions: Episode 98,640 (and counting) Open Europe Blog Trust in the EU falls to an all time low Open Europe Blog And the gold medal for diplomacy goes to... Open Europe Blog
Daily Press Summary Spanish government and regions lock horns over deficit and debt targets Catalonia and Andalusia – Spain’s two most populous regions – decided to boycott yesterday’s meeting with Spanish Treasury Minister Cristóbal Montoro in protest against the tough deficit and debt targets imposed on Spanish regions by the government for 2012-13. Two more regions voted against the targets. Cinco Días reports that Catalonia will not be able to pay social services providers – including hospitals and retirement homes – this month, due to a lack of liquidity. El Mundo reports that Comunidad de Madrid is studying the possibility of requesting a bailout from the Spanish government “in the future”. Separately, new figures from the Bank of Spain showed that the net outflow of capital from the Spanish economy reached above €163bn in the first five months of the year, of which over €41bn only in May. Open Europe Research: Spanish Bailout WSJ Cinco Días El País FT El Mundo El Mundo 2 El Mundo 3Expansión Guardian Guardian 2 Showdown looms at tomorrow’s ECB board meeting; German government rejects equipping ESM with a banking licence The WSJ reports that tomorrow’s monthly meeting of the ECB’s governing council is set to be fractious, with Bundesbank President Jens Weidmann resisting calls by many of his colleagues for the ECB to play a more active role in the eurozone rescue efforts, for example by resuming its purchase of eurozone government bonds. The paper notes that a compromise could be struck whereby the ECB would announce its intention to buy government bonds and to take other measures, but to delay their implementation. The German government yesterday rejected reports that the eurozone’s new permanent bailout fund, the ESM, could be equipped with a banking licence, with a Finance Ministry spokesperson saying such a move “was not necessary”. Speaking on Deutschlandfunk this morning, the FDP’s parliamentary faction leader Rainer Brüderle, described the idea as an “inflationary suicide mission”, adding that “we cannot save the euro by limitlessly printing money”. The concept was also rejected by the opposition SPD, but the Green’s financial spokesperson Gerhard Schick said the idea had some merit, adding that assistance to Spain could be made conditional on it taking measures to impose higher taxes on its wealthiest citizens. Meanwhile, Westdeutsche Allgemeine Zeitung reports that according to a confidential Bundestag document on the ESM, Germany won’t be able to always veto capital calls in case the ESM has incurred losses and needs to restore its €80bn of paid-up capital threshold, given that its Board of Governors can make these decisions on the basis of a simple majority. WSJ FAZ Welt Handelsblatt Zeit Il Sole 24 Ore El País Tagesspiegel: Barthle Westdeutsche Allgemeine Zeitung Talks over new budget cuts continue in Greece; Greek Deputy Finance Minister: Our cash reserves are almost zero The leaders of Greece’s three-party coalition will today resume talks over the €11.5bn budget cuts Greece is due to make in 2013-14. Kathimerini reports that Evangelos Venizelos, the leader of the socialist PASOK party, is proposing that only €6.5bn cuts be implemented over the next two years, while the rest would be made during 2015-16. A separate article in the paper notes that Greece will be forced to issue higher amounts of treasury bills this month, after eurozone governments turned down the request for a ‘bridge loan’ to cover a €3.2bn bond – held by the ECB – which matures on 20 August. Meanwhile, Greece’s Deputy Finance Minister Christos Staikouras told NET television, “Cash reserves are almost zero. It is risky to say until when [they will last], as it always depends on the budget execution, revenues and expenditure.” Separately, German Transport Minister Peter Ramsauer (CSU) told ARD this morning, “Of course, Greece can exit the eurozone”, but added that this would not be “the solution to all problems.” Kathimerini Kathimerini 2 EUobserver Il Sole 24 Ore The Irish government is to begin the process of ratifying the ESM treaty after the country’s Supreme Court rejected a claim brought by independent MP Thomas Pringle that it was unconstitutional and could not be ratified without a referendum. However, the Court referred a second claim concerning the ESM’s compatibility with the EU Treaties to the European Court of Justice in Luxembourg, asking it to urgently determine the matter under its accelerated procedures. Irish Times In an interview with Helsingin Sanomat, Italian Prime Minister Mario Monti confirmed that eurozone leaders “are thinking of a possible intervention in various combinations involving the EFSF, the ESM and the ECB.” He said Italy “doesn’t seem to need any special help at the moment”, but may need “some breathing space” in future if its borrowing costs remain high. Monti is in Helsinki to meet his Finnish counterpart Jyrki Katainen today. Reuters Italia HS: Monti HS FT Telegraph Irish Times La Stampa Le Figaro Le Monde Il Sole 24 OreLiberation Ansa Corriere della Sera Repubblica Figures released by the EU’s statistics office Eurostat yesterday showed that the unemployment rate in the eurozone reached a record-high 11.2% in June. Spain had the highest unemployment rate, at 24.8%, followed by Greece at 22.5%. WSJ  FT EurActiv Ansa Moody's yesterday cut its forecast for the UK economy on the basis that the country's economic and fiscal outlook have weakened due to the eurozone crisis. WSJ Bild reports that according to calculations by Folker Hellmeyer, Chief Analyst at Bremer Landesbank, Germany has saved €60bn in refinancing public debt over past 30 months due to negative interest rate on its bonds. Bild In an interview published in the staff magazine of the Bundesbank, the bank’s President Jens Weidmann said, “Seeing how reluctant some countries are to relinquish their fiscal policy autonomy – even in return for financial assistance – it is hard to imagine political union being achieved in the foreseeable future.” Bundesbank magazine: Weidmann German Professors Hans-Werner Sinn and Friedrich Sell argue in today’s FT, “The distressed countries in Europe’s southern periphery fear exiting or being expelled from the currency union, partly because they believe they would lose all the euro’s advantages permanently. This fear could be laid to rest by making the eurozone an open currency union.” FT: Sinn and Sell The US Congress is preparing to pass a new law which would make it illegal for US carriers to pay into the EU’s carbon aviation tax scheme, EUobserver reports. EUobserver The Guardian reports that the EU is looking to negotiate agreements with Greenland on natural resources extraction, including rare earth metals. Guardian Guardian 2 With an EU-wide arrangement off the table, French President Francois Hollande has introduced a national financial transaction tax today which sees a tax rate of 0.2% levied on transactions in the securities of companies that are headquartered in France. Spiegel