Europe
Fear on Greek consolidation returns as Greek government's tax revenues fail to deliver promises made to the EU and the IMF
The frontpage of Handelsblatt reports that fear has returned in Athens, Brussels, Berlin and Washington as tax receipts for the Greek government have failed to match the expectations. In the first seven months of 2010, only 4.1 percent extra tax income for the government was created, while the EU and the IMF had been promised 13.7 percent for the whole year - a goal which will be hard to achieve as the tax burden has already been increased.
Another article in the newspaper suggests that new protests could take place in the autumn, while investors are already asking for a 10.6 percent interest on Greek 10-year sovereign bonds, whose spread with German bunds is currently 8.3 percent. The article notes that the Greeks will not be able to carry such a high level of interest in the longer term. Kornelius Purps of Unicredit is quoted saying that "we have had a lot of good news from Greece in recents months [...] If that doesn't satisfy investors, what then will bring trust?"
De Telegraaf reports that Dutch top businessman Jaap Blokker has written in the annual report of his company that "our politicians have pushed a unified currency down our throats without asking us. This euro would bring us immeasurable blessings, but now appears to be a very volatile sort of money with considerable less stability than our old and solid guilders, marks and francs".
An article in Der Spiegel looks at the progress of structural reforms in Greece and notes that "the government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent". However, it goes on to say: "The problem is that the austerity measures have in the meantime affected every aspect of the country's economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's gross domestic product shrank by 1.5 percent in the second quarter of this year".
Meanwhile, in an interview with FAZ, Czech Prime Minister Petr Necas has declared that "it is not foreseeable to know which countries will be part of the eurozone in 3 to 5 years", adding that this is one of the reasons why his country "shouldn't hurry with euro entry".
In his BBC Europe blog, Gavin Hewitt looks at the recent data on eurozone growth and argues: "Growth may ease the stresses and strains, but the big question remains unanswered: how can countries with such different economies inhabit a monetary but not a fiscal union?"
The Irish Independent reports that Spanish Finance Minister Elena Salgado announced yesterday that Spain will restore funding of state infrastructure projects by €500 million in 2011, relaxing its austerity plan to cut €6.4 billion of spending.
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EU doubles aid to Pakistan to €70 million;
Aid Commissioner laments lack of EU visibility: "Making sure that our flag shines when we are abroad helping people in need is something that I find incredibly important"
It is widely reported that the European Commission has pledged a further €30 million in aid for flood victims in Pakistan, bringing the EU's total contribution to €70 million. AFP reports that EU Foreign Minister Baroness Catherine Ashton has pledged to UN Secretary General Ban Ki-moon that the EU's support to Pakistan will continue "as long as it is needed".
However, in an interview with EurActiv, Commissioner for Humanitarian Aid Kristalina Georgieva has lamented that, unlike for the US, the EU's aid efforts in Pakistan are barely visible in TV and press coverage of the floods. "Raising the visibility of Europe and making sure that our flag shines when we are abroad helping people in need is something that I find incredibly important. Especially now, when we are still not through with the economic and financial crises and it is hard for people here, and we also have our own disasters at home", she said, explaining that European citizens are making sacrifices in tough economic times to help people in need, therefore their efforts should be better acknowledged. Georgieva also added that she has already asked humanitarian organisations to do more to help the EU help them by flying the EU flag.
Meanwhile, EUobserver reports that the European Commission has granted the modest sum of €90,000 to help Russia cope with reconstruction after the recent wildfires, which are estimated to have done up to €12 billion of damage.
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New financing rules for City law firms likely to be challenged across the EU
The Times' law section notes that European law firms may use the EU's Establishment Directive to challenge new rules, known as alternative business structures (ABS), recently approved in England and Wales, which would allow law firms to accept external investment, from private equity firms for example, from October next year.
Hedge-fund body gives support to EU derivatives regulation
The Irish Independent reports that the Alternative Investment Management Association (AIMA) has urged the EU to move ahead with reforms of the over-the-counter derivatives market. Hedge-fund managers supported the reforms, in spite of the fact they would require "significant costs associated with administrative and operational changes", AIMA said. It added that proposals to report OTC derivative contracts to trade repositories and to clear trades of standard contracts through central clearinghouses would reduce systemic risk. The Commission will make formal proposals for rules on over-the-counter derivatives and credit-default swaps in September.
Euractiv reports that the European Commission has asked France to "respect the rules" on the free movement of European citizens while proceeding with the repatriation of Roma.
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An op-ed by Terence Roth in the WSJ notes that, due to current economic growth, Germany is expected to reach EU-mandated budget deficit targets of 3 percent of GDP in 2012, a year earlier than planned. Despite this, Chancellor Angela Merkel is far from relaxing the planned austerity measures to cut €81.6 billion from public spending. The latest public opinion poll shows that support for Merkel's coalition has dropped to 30 percent.
In an interview with AFP, former Polish President Lech Walesa has expressed his support for Turkey's EU membership, arguing: "There is no Europe without Turkey. Turkey should gradually reach Europe's level of development and enter tomorrow".
Euractiv notes that the European Parliament-funded virtual reality experience, Citzalia, which recreates life in the Parliament, has come under criticism in European media.
Euractiv notes that negotiations over the Anti-Counterfeiting Trade Agreement (ACTA) between the US and EU are stalling on the issue of the EU's geographically protected foodstuffs, such as Champagne and Parma ham, which the US fears could potentially render US products - such as Kraft parmesan cheese - illegal.
Belgian Daily De Standaard has critised EU Foreign Minister Catherine Ashton's recent statement congratulating Rwanda for its last presidential elections, noting that "the EU didn't send any observers to Rwanda, but seems in hindsight perfectly capable apparently to evaluate the election".
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.
