Europe
New Open Europe briefing: legality of a Greek bailout in doubt
Open Europe has published new research, detailing the ways in which the EU could bailout Greece, and what these solutions could cost European taxpayers. Open Europe argues that an EU-led bailout will come with huge economic and political risks, and will for the first time make Europe's taxpayers fully liable for an individual country's debts, while centralising new economic powers at the EU-level.
The research also argues that the legality of a bail-out under the EU Treaties is doubtful - of the ten options for a bailout which Open Europe looked at, only one is unambiguously legal under the Treaties, meaning that EU leaders are likely to bend EU law if they go ahead with a rescue package.
Meanwhile, speaking on the BBC Today programme, former Chancellor Lord Lamont discussed the options for a Greek bailout, and said "I think ultimately it will be a European bailout, but the problem is that is really illegal under the Maastricht Treaty, and they will have to find a way around that."
Open Europe research OE press release BBC: Today programme
Sarkozy and Merkel agree on plan to rescue Greece;
Internal German Parliament briefing: financing Greece's debt is illegal
PA reports that EU President Herman Van Rompuy today said that European leaders have reached a deal on helping Greece, after meeting in Brussels with Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel. "We have an agreement", Van Rompuy said. Details of the 'bailout' will be released after a meeting with EU leaders later today in Brussels.
Reuters reports that Austrian Chancellor Werner Feymann told ORF this morning: "We don't know yet how it [a bailout] will be organised, but I expect it will be a cooperation between (EU member) countries and the IMF". He also said: "We are not talking about a donation or subsidies, we are talking about loans with interest which we provide to help a country in order to avoid irritations on financial markets and crises which nobody can handle anymore".
The FT reports that a senior German official said that a bailout for Greece could involve loans or a commitment to buy Greek sovereign debt. The paper also reports that unnamed officials in Paris have said there is a growing consensus that the IMF would only be involved in a Greek rescue in a technical capacity. FT Deutschland suggests the main reason for Germany's likely support for a rescue package is not solidarity with Greece, but the fact that German banks hold $43.2bn in Greek sovereign debt, and French banks hold around $75bn.
Handelsblatt features an internal report from the legal service of the German Parliament, issued on behalf of the German liberal FDP party. The briefing rules out any form of financing of the Greek budget through the ECB or national central banks, also stating that: "a member state is not allowed to guarantee or take over the liabilities of the central government of another member state." The newspaper adds that Germany is bound by that, and therefore any question of whether Germany or France could issue bilateral loans should be finished. A legal expert is quoted saying: "the no bail-out clause is not just valid with regards to EU action, but also with regards to bilateral action."
Open Europe's research, detailing the ways in which the EU could bailout Greece, is covered in the Mail, This is Money, the Express, Time magazine, Spanish news agency Prensa, Spanish news site Informador and Belgian news site Trends. The Mail notes Open Europe's finding that, based on the UK economy's size relative to other EU member states, a bailout of Greece by the EU could cost UK taxpayers £3.5bn, if Britain would take part in a rescue operation. Open Europe's Pieter Cleppe was also interviewed on Sky News, National Public Radio, and BBC Radio Five Live discussing a potential Greek bailout.
Asked if the UK taxpayer would have to pay if there was a Greek bailout, Chancellor Alistair Darling is quoted by PA saying: "At the moment there is no proposal to do that. What we have said is that primarily the first port of call is the euro area and the euro area are very, very engaged in that."
The IHT reports that Germany is suffering from growing doubts about the euro experiment, and quotes Deutsche Bank's Chief Economist Thomas Mayer saying, "If the German government would just transfer money to Greece, people in Germany would feel their worst fears had come true". Writing in the Times Carl Mortishead argues, "This is a political opportunity to find common cause. When the costs of a bailout, the waste of EU regional and agricultural aid, are truly revealed, it will be deeply unpopular in Germany. At that point, Britain should push very hard for EU budgetary reform."
Gary Jenkins, Head of Credit at Evolution Securities, said there would be "blood on the walls" in trading rooms if the EU fails to deliver after its barrage of Telegraph reports. On his BBC blog Gavin Hewitt argues, "What officials in Athens fear is that if there is now a delay in announcing a bail-out, the markets will turn once again on Greece."leaks talking up a bailout, the
Mail 2 Mail: Brummer Express: Leader Mail This is Money TIME Express Prensa Trends Informador EUobserver FT FT 2 FT 3 Guardian IHT IHT 2 Irish Times Irish Times 2 Irish Times 3 Irish Times 4 Independent Independent 2 Independent: Prosser Telegraph Irish Independent BBC BBC: Stephanomics blog BBC: Hewitt blog EUobserver European Voice EurActiv BBC El Mundo City AM City AM: Heath Reuters Telegraph Telegraph 2 FT Les Echos IHT Irish Times FT City AM 2 Guardian 2 Sun: Leader Guardian: Roberts Times Times 2 El Pais El Pais El Pais La Voz de Galicia Times: Kaletsky Times 3 BBC: Today programme Handelsblatt Il Sole 24 Ore FTD France soir Reuters Italia Il Sole 24 Ore Le Monde Handelsblatt 2
Crisis creates momentum for greater EU 'economic governance'
The Independent reports that EU President "Herman Van Rompuy, is using the financial crisis sweeping the eurozone to launch an audacious grab for power over national budgets." In the FT , Tony Barber notes that the rescue plans being discussed for Greece point to "closer economic links" and that while "eurozone governments cannot be said to have 'crossed the Rubicon' to a fully integrated fiscal union...they have done more than dabble their toes in the water."
A leader in the paper argues, "Until now euro members were not ready for fiscal co-operation. Clinging to a fiction that they would let one of their own fall undermined their credibility. Markets are calling their bluff. Euro members must start to build an explicit framework to govern their fiscal interdependence. This crisis is a result of failed policies - but it presents an opportunity for setting them right."
Meanwhile, also in the FT, Quentin Peel argues, "Crisis or no crisis in Greece, Germany is not ready to drop its resistance to anything that smacks of intervention in the role of the ECB, or its own fiscal policies." A front page editorial in FAZ argues that it was "absurd" for Germany to raise its retirement age to 67, only to effectively help finance Greece, which has refused to raise its retirement age to 63. It notes that the euro was sold to the Germans in return for the Growth and Stability Pact, adding that if this isn't going to be respected, "then one would wish to see the German Mark return". Meanwhile, Die Welt reports that "the Greeks are seducing Germany into debt trap".
Open Europe blog FT: Peel Telegraph: Conway Independent FT FT: Leader Irish Independent: Keenan FT: Brussels blog Welt FAZ: Steltzner Handelsblatt
An article in the Times looks at the economic troubles afflicting other eurozone states, including Spain, Portugal and Ireland, while the BBC reports that the Spanish economy shrunk 0.1% in the final quarter of 2009, making it the last major economy to remain in recession.
Times City AM: Choudhry IHT BBC
MEPs propose stronger powers for EU's new financial supervisors
Euractiv reports that MEPs yesterday presented a total of four draft reports which, if adopted, would significantly increase the EU's proposed new powers on financial supervision and which bore very little resemblance to proposals drafted by national finance ministers in December. MEPs and member states both have to agree on the legislation.
The FT notes that the suggested changes would give much firmer powers to three proposed new agencies - the European supervisory agencies for banking, insurance and the securities markets. These powers would include, for example, a binding mediation role for the banking authority to solve conflicts between national supervisors. The MEPs' proposed changes are likely to spark fierce disagreement with member states, particularly the UK.
José Manuel Garcia-Margallo y Marfil, the Spanish MEP who is guiding the banking authority legislation, is also suggesting the creation of a "European Financial Protection Fund", which would help European banks "facing difficulties when those could menace financial stability of the European single financial market". The proposed amendments also suggest specific burden-sharing arrangements between countries in the event of the failure of one or more institutions in "in extreme, exceptional circumstances and in the context of a systemic crisis".
EurActiv FT Open Europe press release
EU farm subsidies at highest level for a decade
The International Centre for Trade and Sustainable Development reports that new figures from the EU show a sharp increase in total levels of farm subsidies. Support levels stood at over €90 billion in the 2006/2007 marketing year, the highest level since the last decade, up from €75.6 billion in 2002, when support was at its lowest in the last fifteen years. However, there was a drop in production-linked payments, which are classed as the most trade-distorting.
ICTSD
Scrutiny of European Parliament spending reveals Budget Committee is often sidelined
European Voice reports that details have emerged that millions of euros of spending by the European Parliament has been endorsed by the EP's Bureau, which includes the President, 14 Vice-Presidents and five Quaestors, and only subsequently endorsed by the EP's Budgets Committee. Such decisions include the €35 million purchase of the former Conservative HQ in London, 32 Smith Square, to be the EP's London office.
Further details that emerged include a meeting of the centre-right EPP-ED group in the French overseas department of Réunion in the Indian Ocean costing €191,607, six times more than the cost of a delegation of the Parliament's Development Committee to Congo. A four-day meeting of the Socialists in Manchester was allocated €3,357. A two-day trip to Romania by the EPP-ED cost €359,738.
European Voice
Open Europe's Mats Persson is quoted in the National Interest arguing, "Until the EU comes up with something actually worth talking about, it's not surprising that Obama thinks that it's more important to travel to Asia, South Africa and to attend NATO summits."
National Interest Open Europe blog
Open Europe Director Mats Persson is quoted by Lithuanian newspaper Vakary Ekspresas, arguing that "not only are some EU Directives very costly, but they also risk damaging EU's competitiveness, as well as they may encourage protectionism, provoke investment outflows and enhance unemployment".
Vakary Ekspresas OE Research: Out of control? Measuring a decade of EU regulation
Open Europe's Pieter Cleppe is quoted by the Czech newspaper Neviditelný Pes, arguing that "they [EU institutions] are setting up their own committees claiming that these are independent think-tanks, when, in fact, they are cheerleaders for the EU".
Neviditelný Pes
In an article looking at MEPs' pensions for Professional Pensions, Thomas Selby writes, "The affordability of the current system has been widely criticised, especially after research by Open Europe revealed that all MEPs receive an annual pension of £27,954 by paying nothing."
Professional Pensions Open Europe press release
De Telegraaf reports that European Commissioners spent €4 million on travel expenses, dinners and gifts last year, with Commission President Barroso having spent most.
RTL Telegraaf
Plans to hire 150 extra staff and boost MEPs' monthly allowances for assistants by €1,500 have been approved by the European Parliament's Budget Committee.
European Voice Open Europe blog
MEPs vote against controversial EU-US data-sharing agreement
The BBC reports that MEPs have today voted to reject the controversial EU-US anti-terrorism data-sharing deal, known as SWIFT. EurActiv had reported that MEPs were likely to decide to defer the vote while member states tried to persuade them to accept a compromise.
BBC EurActiv European Voice: Editorial
The FT reports that the House of Lords European Union Committee has called on the UK to resist the EU's proposed Alternative Investment Fund Managers Directive, warning that, if passed in its current form, the UK and EU economies would be "seriously damaged".
FT Open Europe research
Euractiv notes that the German Finance Minister Wolfgang Schaeuble will support the Portuguese candidate for ECB Vice-President, which would leave the way clear for the German candidate for President, Axel Weber. The appointments are due to be made next week.
EurActiv
On his Coulisses de Bruxelles blog, Jean Quatremer comments that the new Commission team has finally been approved by MEPs but notes that, despite winning over 70% of the overall vote, nearly 60% of French deputies voted against the incoming Commission.
Coulisses de Bruxelles
Andrus Ansip, Estonian Prime Minister, has voiced concerns that Estonia's bid to join the eurozone may be made more difficult due to the Greek crisis.
FT
Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: openeurope.org.uk or call us on 0207 197 2333.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment