German cabinet source: Greek bailout could be "double" the amount agreed;
Eurozone becoming a "no-go zone" for investors
The front page of Handelsblatt quotes an unnamed German cabinet source saying the Greek bailout package agreed by eurozone leaders at the weekend could in the end be "at least double as high" as the €30bn of eurozone and €15bn of IMF funding agreed so far. The article also cites European Commission sources suggesting that a credit line of up to €90 billion has not been excluded. The paper adds that the text, which was sent to eurozone finance ministers after their telephone meeting on the Greek bailout program, reads: "The programme will cover a three-year period."
The FT reports that Greece saw strong demand for its latest debt auction yesterday but was forced to pay a hefty interest rate of 4.85 percent on one-year bonds, compared with 2.2 percent in January this year. The WSJ notes that the price of 10 year bonds also climbed yesterday, a sign that the market remains unconvinced by Greece's solvency.
The FT quotes Gikas Hardouvelis and Platon Monokroussos, senior economists at EFG Eurobank in Athens, who wrote, "We believe there is a high probability of the government applying for the mechanism over the next few weeks, if not days."
The WSJ notes that Germany is still trying to determine whether it can grant the aid without seeking parliamentary approval, with regional elections on 9 May meaning that Chancellor Angela Merkel may feel compelled to consult parliament, even if she could legally avoid it.
The Dutch parliament will debate the bailout measure tomorrow and would both have to approve the bailout, and pass a supplementary budget bill to distribute the funds. "The last word is for the parliament," a Dutch Finance Ministry spokesman said.
The Telegraph quotes financier George Soros warning that the eurozone's proposed rescue package would still impose too high a cost on Greek borrowing. He said, "While five per cent is better than what the market is willing to offer, a rescue package should offer concessional rates".
The FT notes that Erik Nielsen, European Economist at Goldman Sachs, warned that, without debt restructuring, the scale of the adjustment needed would be unprecedented in any European economy. To rebuild competitiveness, "I think you may be looking at the need to lower minimal wages by 15 per cent," he said.
Meanwhile, the Telegraph reports that global fund managers are beginning to shun the eurozone, concerned by the flaws exposed by the Greek crisis. "Europe has become a no-go zone," said Patrik Schowitz, Equity Strategist at Bank of America Merrill Lynch. "As recently as five months ago investors regarded Europe as the most attractive play on global economic recovery."
AIFM Directive rapporteur proposes compromise on non-EU based managers and funds
The FT reports that the rapporteur for the EU's AIFM Directive to regulate hedge funds and private equity firms, Jean-Paul Gauzes, has proposed a new solution to try and resolve disagreement over the treatment of non EU-based fund managers, suggesting a "two-tier" approach. The EP's Economic Committee is set to vote on the legislation on 27 April.
Under his plan, non-EU managers wanting to market products in the EU would be able to obtain a "passport" to do so if they agreed to comply with the provisions in the Directive. This would have to be backed by an agreement with their home country market regulator to oversee that compliance.
A second aspect to the proposal would allow non-EU funds to gain passport rights if the jurisdiction in which they were housed met four conditions: concerning fiscal standards, rules on information exchange between supervisors, reciprocity and anti-money laundering rules.
Handelsblatt quotes German liberal MEP Wolf Klinz saying "this is a step in the right direction, because full equivalence among European and third country rules cannot be reached".
Dow Jones reports that Gauzes envisions three levels of classification for countries: a top level for countries with strong rules and enforcement, with funds in these countries allowed to accept money from EU investors. A second classification would apply for countries lacking some aspects of financial regulation or enforcement. For funds in these countries, European national rules for placing money with alternative investment funds would continue to apply, but these funds wouldn't be able to receive EU-wide authorisation or a 'passport' to accept investments. He said he thought the Cayman Islands would be in the second category. Countries with the worst financial regulation would be placed on a 'black list', and European investors would be prohibited from investing in funds located in these countries.
Meanwhile Reuters reports that EU Internal Market Commissioner Michel Barnier has asked the French government to soften its stance on the Directive. A source close to Barnier is quoted saying that the Commissioner "is in contact with the Elysee...He has visited Xavier Musca (Sarkozy's economic advisor)." Barnier wants Paris to accept that non-EU funds should be able to obtain a passport to do business on the condition they abide by new EU rules.
Commission to launch investigation into EU pension reform with eye on retirement ages
FTD reports that EU Economic Affairs Commissioner Olli Rehn has announced that the Commission wants to specify a framework for pension systems in EU member states. While the EU is only supposed to play a limited role in social policy, Rehn is planning, in conjunction with the Commissioners for the Internal Market and Social Affairs, for a Green Paper in June on the situation of the pension schemes in all EU countries. The stated goal is "to encourage the members to help initiate substantial pension reforms." The article notes that the Commission said that it is important to have common parameters, such as the length of a career and that "Without the pension reforms, we will not achieve sustainable public finances."
Finance Ministers to discuss tightening EU rules on member state budget deficits
Business Week reports that EU finance ministers will this week debate proposals to tighten surveillance over government budget deficits to prevent a repeat of Greece's fiscal crisis. EU Economic and Monetary Affairs Commissioner Olli Rehn will tomorrow outline the proposals, which may include more frequent warnings to governments with budget gaps above the EU limit. Rehn's spokesman Amadeu Altafaj said in a telephone interview. The "problem is lack of enforcement of the budget rules," Altafaj said. "We are talking about re-enforcing medium-term budgetary surveillance."
FTD quotes Rehn saying that there will be a "coordination of the extent and development of the total expenses of the budgets". He added, "But if we take our common destiny in the Economic and Monetary Union seriously, then all members must observe the rules which they have given themselves." The article notes that article 136 of the EU Treaty allows for such close economic policy coordination and that on 12 May, the Commission should propose the new supervision mechanism."
EU to push for unified position on new bank levy ahead of G20 meeting
City AM reports that a draft letter written by EU officials indicates that the EU may be moving towards support for a bank levy to provide a fund to cover future bailouts, reading: "We are ready to cooperate with G20 members on globally coordinated principles for a levy on the financial sector." EU finance ministers will attend an informal meeting in Madrid on Friday to try and reach a unified position, before a meeting of G20 finance ministers next week.
However, EurActiv reports that the EU is moving away from a new 'Tobin' tax on financial transactions, with an internal Commission paper saying a tax would be costly for business and government alike, and would be ineffective in fighting speculators, reading: "such a tax may in fact increase price volatility in specific markets by reducing the number of transactions and liquidity".
EU planning law threatens new nuclear power stations
EU Environment Commissioner Janez Potocnik has issued a "final warning" and threatened to take the UK to court over failing to adhere to EU planning law. According to the law, citizens must be informed about the possible environmental impacts of industrial pollution in their area. The Guardian notes that the move could hit the UK's push for more new nuclear power stations.
Germany refuses a change in agricultural funding
Handelsblatt reports that the German government is against increasing its net contribution to the EU budget, in order to ensure they receive enough in CAP funds. They also oppose a redistribution of funds in favour of Eastern European countries such as Romania. The Commission plans to present a proposal for an agricultural reform in November this year.
In a letter to the Irish Times Dr Anthony Coughlan, Director of the National Platform EU Research Centre, argues that "Irish people are finding out the hard way these days that we cannot restore our lost economic competitiveness by devaluing our national currency", adding, "This experience will surely lead future historians of our times to conclude that abolishing the Irish pound was the worst decision ever taken by an Irish government."
A leader in the Independent argues: "The Tory manifesto boasts that Britain has 'a major role in the affairs of the EU'. But by pulling his party out of the mainstream centre-right European Peoples' Party, Mr Cameron has put the Conservatives on a road towards marginalisation on the continent."
El Mundo reports that at the end of the rotating Spanish Presidency term, the position of Spanish Europe Minister, held by Lopez Garrido, is expected to be removed in efforts to streamline the government.
The European Court of Justice has indicated that member states can impose quotas on the number of EU students coming from other countries
EUobserver reports that the latest OECD figures on development spending by member states indicate that the EU is drifting away from commitments to deliver 0.7 percent of its gross national income in development assistance by 2015.
UKIP has said it will not field candidates in the General Election against seven sitting MPs from rival parties and has asked supporters to vote for them instead. They include David Drew, Philip Davies and Douglas Carswell, although the party insisted that none of the candidates had asked for such support.
Channel 4's FactCheck looks at Open Europe suggesting that the EU's 2004 directive on the freedom of movement rules out a general deportation rule, but does allow it in some cases, as long as individual circumstances are taken into account.
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