German Finance Ministry draws up plan for €25bn Greek bailout;
Fresh speculation that UK will contribute to bailout
Spiegel magazine reported over the weekend that the German Finance Ministry has drafted a plan for eurozone countries to provide Greece with aid worth up to €25bn, with each country paying according to its proportion of capital in the European Central Bank. According to the article, the help would be made up of both credits and guarantees, and Germany would contribute €4-5bn, a total of 20% of the full bailout. A spokesman for the Ministry has "completely rejected" the speculation, reports the BBC.
In a briefing for Open Europe, Swedish political consultant Jesper Katz notes that if the money from the bailout were to come from only the eurozone states, Germany's proportionate share would be between €5.7 and €7 billion - not €4-5 billion. This discrepancy could be explained by non-Eurozone countries also being asked to take part in a bailout, since these countries hold a 30-percent share in the ECB. In that case, since Britain holds a 14.5% share in the ECB, its proportion of the loans and guarantees extended to Greece would be between €2.9 and €3.7 billion. Dan Hannan notes similar findings on his Telegraph blog.
According to German financial supervisor BaFin, a Greek default could trigger a massive banking crisis in Germany because of its impact on other PIIG countries. In a letter to German Finance Minister Wolfgang Schäuble seen by Spiegel, BaFin's President Jochen Sanio wrote: "The main risk for Germany is the collective problems of the PIIG-states...Greece could be the trigger". Germany has bought about €522.4 billion in bonds from the various PIIG states. The front page of Handelsblatt reports that Mr.Schäuble has expressed a preference for bi-lateral loans over a full bailout.
Greece's PM George Papandreou has criticised the EU for allowing his country to cover up the true extent of its 12.7% budget deficit; "The EU must admit that its institutions are responsible for the fact that this was allowed to happen," he said. AP reports that the Greek Deputy Prime Minister Theodoros Pangalos has said that EU leaders were "not up to the scale of the task".
Meanwhile, when asked yesterday on the BBC's Andrew Marr show yesterday what would happen if Greece could not raise money at similar interest rates to other countries, and if a bailout would then be needed, Mr Papandreou said: "Well, it won't be a bailout. We don't have the specifics, because this is very new, as to what the financial tool will be, but it could be anything from a guarantee to finding other ways of borrowing money. But again, it's not going to be handouts, it's going to be Greece borrowing money."
The FT reports that the Greek government is considering fresh tax increases and public sector pay cuts, including increases in value added tax, fuel tax and further cuts in civil servants' pay. A general strike of public and private sector workers is planned for Wednesday.
Writing in the FT George Soros argues: "makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way...Even if it handles the current crisis, what about the next one? A well-organised eurobond market would be desirable. The question is whether the political will for these steps can be generated."
In an interview with Les Echos, Jean-Michel Charpin, a member of the European Statistical Governance Advisory Board, says that he "cannot rule out" the possibility that other eurozone countries provided falsified statistics, as Greece did. Bloomberg reports that Greece arranged swap agreements with about 15 securities firms, including some payments from banks that may have helped hide the country's true deficit.
BBC EUobserver Les Echos Telegraph: Hannan blog Guardian Bloomberg FT: Soros
Bloomberg 2 FT AFP WSJ: Stelzer Telegraph: Evans-Pritchard FT: Brussels blog Irish Times: Pine Irish Times Weekend FT Les Echos Le Figaro Le Point Euronews Coulisses de Bruxelles Les Echos Deutsche Welle AP OE research
Takeover Panel: New EU authority would be catastrophic
In an interview with the Independent on Sunday, outgoing director-general of the Takeover Panel, Robert Hingley, comments on the proposed European Securities and Markets Authority (ESMA) warning: "There is a political impetus for harmonisation across the market, and perhaps [a consensus] that the Brits screwed up during the crisis and should pay the price. ESMA would be allowed to make rules binding on the takeover code so they could alter our code and they would also have the right to interfere in specific transactions and that, we think, would be wrong. If [the panel] is included in ESMA, it wouldn't bring the world as we know it to a catastrophic close, but it would mean there is the right at the EU level to alter the way takeovers are conducted in the UK fundamentally."
The EU's Internal Market Commissioner, Michel Barnier, will visit London next week to hold discussions, according to the Sunday Telegraph, with "key actors in the debate on the future of the financial services industry". He is expected to meet with the heads of two of Europe's most successful hedge funds - Lansdowne Partners and Brevan Howard Asset Management - to discuss the Alternative Investment Fund Management Directive (AIFM).
Independent on Sunday Sunday Telegraph OE research: AIFM Directive
Barroso accused of 'power grab' over EU appointment of ambassador to US
EUobserver reports that Swedish Foreign Minister Carl Bildt has sent a letter complaining about the way the European Commission recently appointed its top ambassador to the US. Bildt's letter, dated 19 February and addressed to EU Foreign Minister Catherine Ashton, asks how the appointment was made, since the rules governing the procedure are still under discussion by member states as they finalise the establishment of the European External Action Service.
The European Commission used this 'transition period' to nominate Joao Vale de Almeida, EU Commission President Jose Manuel Barroso's former chief of staff and a fellow Portuguese official, to become its new head of mission in Washington. However, under the Lisbon Treaty, diplomatic appointments will be Ms Ashton's prerogative, who is supposed to represent both the Commission and the member states. The article notes that some member state officials see the Almeida decision as a power grab by Barroso. "In the future, if the US wants to send a message to the EU, it will go through Almeida because it knows he has a special relationship with Barroso. Ashton will be left out," one official said.
EUobserver Economist: Charlemagne notebook Spectator: Coffee House blog
EU Foreign Minister to establish new central intelligence-sharing department
EUobserver notes that the EU is planning to pull together three intelligence-sharing bodies based in Brussels to form a new department in the External Action Service (EAS), currently being established by EU Foreign Minister Catherine Ashton. Sources in the EU institutions say she aims to merge the EU Council's Joint Situation Centre, its Watch-Keeping Capability and the European Commission's Crisis Room into one new department to help guide EAS decisions on security matters.
The article notes that the mandate for the new department remains undecided. Some European diplomats would like it to make policy recommendations as well as analytical reports. However, the quality of the existing bodies' reports is in dispute: "I sometimes get faster alerts from my national newswire," one EU diplomat said. Meanwhile, the best classified information is often shared through informal channels between smaller groups of EU countries with a history of intelligence co-operation.
EUobserver OE research
Conservatives send Ken Clarke on mission to reassure the EU
The Telegraph reports that Ken Clarke, the Shadow Business Secretary, is to hold talks in Brussels with European Commission President Jose Manuel Barroso to allay fears over what a Conservative government might mean for the UK's relationship with the EU. Clarke is expected to seek concessions on financial and employment regulations during the meetings, which are not listed on the European Commission's official diary. Mr Clarke will also meet Michel Barnier, the French Internal Market Commissioner. "If it is clear that Mr Cameron is prepared to work with us then we might have to show we are prepared to offer a concession in return," said an EU official.
Telegraph OE research
German Foreign Office role in EU policy reduced under Lisbon Treaty
Handelsblatt reports that the Office of the German Chancellor has taken over the power to make central decisions on EU policy from the German Foreign Affairs Office. The newspaper notes that this is a "tricky development" because of the year-long struggle between the Chancellery and the Foreign Office, each headed by different parties within the ruling coalition government. The article notes that the Lisbon Treaty has limited the role of German Foreign Minister Guido Westerwelle in German EU policy, with foreign ministers now excluded from meetings of the European Council.
The FT reports that the Dutch Prime Minister confirmed yesterday that troops from the Netherlands will pull out of Afghanistan. This comes after the collapse of his coalition, triggering an election which polls suggest is likely to bring significant gains for the far right.
FT FT 2 Le Point Le Figaro Times WSJ Telegraph EUobserver Independent Irish Times EurActiv
Fortnightly bin collections for all
The front page of Saturday's Telegraph reported that fortnightly bin collections are to be extended across the country. Guidance signalling the end of weekly bin collections has been sent to councils by the Audit Commission, and the Government has ordered councils to find £550 million in savings from waste disposal budgets. Councils hope that the move will encourage residents to recycle more and reduce the amount of waste sent to landfill. Under the EU's Landfill Directive, the UK is required to reduce the amount of landfill waste by 25% from 1995 levels by 2010, a 50% reduction by 2013 and a 65% reduction by 2020.
£200,000 EU comic book to promote EU bureaucrats to children
The Sunday Telegraph and the Daily Mail both report that the European Commission has produced a comic book depicting the humanitarian work of two fictional EU bureaucrats. More than 300,000 copies of the comic, Hidden Disaster, are to be distributed to homes and schools across Europe, at a cost of £200,000 to taxpayers.
EU Referendum blog Mail Sunday Telegraph
£60m taxpayer bill for politicians' CO2 emissions
Writing in the Sunday Telegraph, Christopher Booker argues that, according to the EU's Official Journal, the UK Government has allocated £60 million worth of public funds to be used to buy carbon credits from developing countries for government buildings and official business. Booker argues that this move illustrates the Government's unwillingness to make the sacrifices expected of the population and instead "they have quietly arranged for the rest of us to shell out £60 million to allow them to carry on much as before."
Handelsblatt reports that the new Volkswagen manager Wolfgang Schreiber has described the EU's long term climate goal, to reduce CO2 emission for cars to 135 grams per kilometre by 2020, as "unrealistic".
Handelsblatt OE research: Climate Action and Renewable Energy
The Wintersport blog reports that the EU is subsidising an indoor Ski complex in Lithuania, which is due to open next year. It notes that the complex will host a 412 metre long slope, expecting to attract 400 visitors a day. The EU is paying about 35% of the costs, totalling €11.5 million.
Euractiv reports that EU foreign ministers meeting today will discuss "what to offer" the Ukraine, as the country's new President-elect, Viktor Yanukovich, appears to be considering moving towards establishing a customs union with Russia.
The European Commission is set to give the Orange and T-Mobile merger the go-ahead, creating the largest mobile phone company in the UK, according to the Guardian.
Open Europe's Stephen Booth appeared on Irish Newstalk radio yesterday, arguing that the EU's growing role in justice and home affairs raises serious questions about democratic oversight and safeguards for civil liberties.
Open Europe research
The Turkish daily Hurriyet cites Open Europe's poll of German voters in June 2009, which found that 70% were against using taxpayers' money to bail out countries in financial difficulties.
Hurriyet OE press release
The WSJ reports that unions representing Portugal's public-sector workers are preparing a national strike for 4 March to challenge a proposed wage freeze by the Portuguese government.
Spain is determined to raise its retirement age from 65 to 67 years despite probable strike action this week, reports Le Figaro.
A new YouGov poll for the Sunday Times put the Conservatives on 39%, down one point on January's figure, and Labour on 33%, up two. The Liberal Democrats drop one point to 17%. The six-point gap is the narrowest since December 2008.
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.