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New on the Open Europe Blog A new EU treaty, a December summit… déjà vu anyone? Open Europe Blog Germany faces some tough decisions on the ECB Open Europe Blog While everyone is talking about Greece, things happen elsewhere in the eurozone Open Europe Blog
Daily Press Summary Open Europe is hosting a lunchtime discussion in London this afternoon entitled “What can the Eurozone learn from Eastern Europe’s transformation?” featuring Professor Leszek Balcerowicz of the Warsaw School of Economics, formerly Governor of the National Bank of Poland, and Poland’s Deputy Prime Minister and Finance Minister on two separate occasions. For further information, please contact Sarah Hodges on 0044 (0)207 197 2333 or atshodges@openeurope.org.uk. Catalonia requests €5bn bailout from the Spanish government but says it will reject “political conditions”; Private-sector deposit flight from Spanish banks hit record in July Catalonia yesterday made an official request for a bailout of over €5bn from the Spanish government. Catalan government spokesman Francesc Homs told the press that Catalonia will not accept “political conditions” in return for the money and “is not going to thank” the Spanish government for the bailout. Catalan Governor Artur Mas will discuss the details of the bailout when he meets Spanish Prime Minister Mariano Rajoy on 20 September. Expansión notes that, following the bailout requests of Catalonia, Comunidad Valenciana and Murcia, half of the money in the rescue fund set up by the Spanish government to help the regions has already been committed. Meanwhile, new ECB data showed that private-sector deposits held by Spanish banks fell by €74.2bn in July – the biggest monthly drop since the ECB’s statistical series began in 1997, reports El País. Open Europe’s Twitter coverage of Rajoy’s joint press conference with European Council President Herman Van Rompuy in Madrid yesterday featured on the Telegraph’s live blog. Open Europe research Telegraph: Live blog Expansión Expansión 2 El País El País 2 El País 3 El País 4Cinco Días El Mundo IHT Guardian EUobserver EUobserver 2 Le Monde Euractiv European Voice TelegraphIrish Times Euractiv Times FT CityAM WSJ FT Editorial Draghi: A United States of Europe is not the solution to the eurozone crisis Writing in Die Zeit today, ECB President Mario Draghi argues that the current “solutions offer binary choices: either we must go back to the past, or we must move to a United States of Europe. My answer to the question is: to have a stable euro we do not need to choose between extremes.” Draghi suggests that a new architecture is needed, with Germany remaining the “anchor of a strong currency”, but that a political union is not a prerequisite, adding “economic integration and political integration can develop in parallel”. Draghi suggests a model based on fiscal responsibility, combined with financial regulation and oversight, arguing, “This is not the end, but the renewal of the European social model.” Draghi concludes, “Those who want to go back to the past misunderstand the significance of the euro. Those who claim only a full federation can be sustainable set the bar too high. What we need is a gradual and structured effort to complete EMU. ECB Press release Monti: Preventing ECB intervention in the bond markets could be “own goal” for Germany; Repubblica: Berlusconi wants early elections in return for support for new electoral law In an interview with Il Sole 24 Ore, Italian Prime Minister Mario Monti said, “The current configuration of [borrowing costs] spreads…creates the potential for inflation in Germany, which I don’t think is what either the Bundesbank or the German government are wishing for. Preventing the ECB, as the Bundesbank wants, from intervening in the sovereign bond markets to temper [borrowing costs] imbalances may turn out to be, from Germany’s point of view, an own goal with paradoxical effects.” Monti will meet German Chancellor Angela Merkel in Berlin today. Meanwhile, according to Italian daily La Stampa, French President François Hollande told Monti during his visit to Paris at the end of July that Germany would be keen for Italy to tap the eurozone bailout fund as well as Spain. Separately, La Repubblica reports that former Italian Prime Minister Silvio Berlusconi could demand that early elections take place in November in return for his party’s support for a new electoral law. FT Repubblica Repubblica 2 IHT Il Sole 24 OreIl Sole 24 Ore: Monti Les Echos La Stampa Labour warns about costs of EU regulation The FT reports that several Labour shadow ministers have sent a letter to the Government warning of the negative impact of future EU regulations on British business. Of the upcoming Solvency II regulations, the letter warns that “Investment in infrastructure projects could be reduced, it could restrict access to finance for UK business, and would place burdens on the UK economy.” The UK has formed a bloc along with Germany, Ireland and the Netherlands against the Solvency II proposals in the current negotiations, although this is not yet large enough to block their passage. FT Open Europe research According to a Portuguese government source quoted by Diário Económico, the EU-IMF-ECB Troika could agree to relax Portugal’s deficit target for this year and fix it at “slightly over 5% [of GDP]”, given that the country has achieved a higher-than-planned reduction in its external deficit. FT WSJ Irish Independent Diário Económico Greece to pursue special economic zones to boost investment Greek development minister Kostis Hatzidakis announced yesterday that Greece is in talks with the European Commission over setting up special economic zones, tax and possibly regulatory concessions, in an attempt to encourage investment in Greece. Hatzidakis notes that such zones would be controversial with other eurozone countries as they would give Greece a comparative advantage. Separately, both Credit Agricole and Societe Generale are in talks to sell their Greek businesses in an attempt to reduce their exposure to the crisis. Open Europe’s Raoul Ruparel appeared on Sky News over the weekend discussing the crisis in Greece. Kathimerini Kathimerini 2 FT CityAM WSJ Le Monde Les Echos La Tribune reports that the French government is expected to cut its growth forecast for 2013 from 1.2% to 1% of GDP – which remains higher than the 0.5% predicted on average by economists La Tribune In an interview with Bild, Bavarian Minister-President Horst Seehofer and leader of the CSU - the Bavarian sister party of Chancellor Angela Merkel’s CDU – distanced himself from recent widely criticised comments made by the party’s general secretary Alexander Dobrindt in which he predicted Greece would leave the euro by next year. Bild Spiegel Süddeutsche Writing in Handelsblatt, former ECB chief economist Jürgen Stark argues that in attempting to combat the eurozone crisis, the ECB has "repeatedly crossed red lines", and that plans to buy up government bonds amount to "illegaly financing states”, which he warns "will lead to higher inflation". Handelsblatt Handelsblatt: Stark Angela Merkel’s CDU has hit a four year polling high according to a new poll for Stern and RTL, with 39% of respondents declaring their support for the party – an increase of 3%. The SPD has fallen to 26%, followed by the Greens on 12%, the Pirate Party and Die Linke both on 7%, with the FDP on 5%. Stern Welt Der Spiegel reports that during her visit to China today, Germany Chancellor Angela Merkel will push the Chinese government to become more engaged in the eurozone crisis, in particular by encouraging China to purchase more debt from Italy and Spain. Spiegel In an interview with the Guardian, Nick Clegg denied rumours that he will accept a job in Brussels and abandon his party before the next general election. “I don’t like comfort-zone politics,” he said. Guardian