Portugal under pressure to seek aid from EU;
Die Welt: Commission proposal to increase bailout fund rejected by Germany
FT Deutschland reports that Portugal is under pressure to apply for assistance from the EU-IMF bailout fund, quoting a source from the German Finance Ministry saying, "If Portugal were to use the fund, it would be good for Spain, because the country is heavily exposed to Portugal". This has been denied by Portuguese, Spanish and German governments.
Spanish President José Luis Rodríguez Zapatero is quoted in Expansion noting that "Spain passed the bank stress tests" earlier this year, and Spain will "absolutely" not need an EU bailout. The Times reports that Spain's indebted regions are issuing their own bonds in an effort to cut debts. Spiegel notes that "if Spain falls, the euro falls", reporting that "next year Spain must obtain €65bn on the capital market in order to replace old debt with new."
According to Die Welt, the European Commission floated a proposal to double the EU's share of €440 of the bailout fund, echoing yesterday's comments by Axel Weber, Head of Germany's Bundesbank. The Commission has refuted the claim and the German Government was quick to reject the suggestion. Handelsblatt quotes Germany's Finance Minister, Wolfgang Schäuble saying, "I don't want to hear anything about these demands". This comes as Germany has seen credit default swaps measuring risk on German bonds rise significantly this week, reports the Telegraph.
A German government spokesman told FTD that a French-German proposal for a permanent crisis mechanism will be presented soon. French Finance Minister Christine Lagarde is quoted saying that the decision whether or not to include haircuts for private creditors should be decided "case by case", which is contrary to the German position. FAZ reports that the recent position in economic policy taken by Germany is being criticised harshly by the British financial sector as counterproductive and factually wrong. Erik Nielsen, European chief economist at Goldman Sachs, said "I am completely against the published concept, especially if future help for a member state should depend on a conversion of debt".
Meanwhile, Open Europe's Pieter Cleppe appeared on BBC World Service in a debate with Professor André Sapir, former Commission President adviser, discussing the eurozone crisis. "Sooner rather than later politicians in Germany will realise that there is no way out, that even if the rest of Europe wants to implement all the German proposals on better budgetary supervision, this won't be enough to avoid expensive bailouts. They might come to the conclusion that the least expensive conclusion is that a German bloc would leave the eurozone", said Pieter.
FAZTelegraph Expansion Telegraph 2 Telegraph Mail Independent Euobserver FT.de 2 FT.de FAZ Handelsblatt FTD Guardian FTD Welt Spiegel Times Guardian El Pais Times 2 FT 3 FT 4 FT 5 Economist Economist 2 Guardian FT FT 2 FT Guardian WSJ Reuters AFP BBC La Repubblica FTD Le Monde Irish Independent Irish Independent 2 FAZ AFP Irish Times Irish Times 2 Irish Times 3 Irish Times 4 Irish Times 5 Irish Times 6 FT.de FT FT Deutschland FTD Dow Jones Deutschland Der Spiegel Rheinischer Merkur Irish Independent BBC World Service 1'40 in FT Deutschland Welt Telegraph Handelsblatt BBC World Service 1'40 in AFP
Eurozone comment round-up
On Conservative Home, Open Europe's board member George Trefgarne looks at the success of the Business for Sterling campaign, Open Europe's predecessor and also led by Lord Leach, in keeping the UK out of the euro, noting, "Not only do we as a nation owe them a debt of gratitude, their campaign was perhaps the most successful on the right of British politics for many decades". "What started as a somewhat lonely, marginal enterprise gradually gained momentum as, again and again, it not only made the right strategic calls, but the right tactical ones too...Imagine, however, if they had failed? It is no exaggeration to say Britain would be in nearly as bad a state as Ireland is now."
The Economist's Bagehot notes that "a Spanish collapse would take the eurozone's ills to a new level. Amid a global meltdown, perhaps Tories would forget their bluster and agree that British interests would not be served by standing aloof and watching Spain's reduction to economic rubble." In Spanish economic daily Expansión, Gabriel Calzada, Associate Professor of Economics at the King Juan Carlos University warns: "It's now or never. If the Spanish government doesn't act immediately, the euro and the European project could collapse like a castle of cards."
In the WSJ, Stephen Fidler argues: "The peripheral countries of the eurozone borrowed in a currency that belonged mainly to Germany and the other core countries of the eurozone [...] The euro did allow governments such as in Greece and Portugal to pile on debts that otherwise would have been recognized as unsustainable. When governments in what used to be called the third world defaulted, they often did so with those debts at between 40% and 60% of GDP."
On Reuters's Breaking Views, Noah Barkin writes: "Unthinkable only a few weeks ago, a small but growing number of experts now believe some version of this nightmare scenario could become a reality for the eurozone."
An editorial in Le Monde criticises German Chancellor Angela Merkel's recent suggestions that bondholders should assume part of the losses in the event of a sovereign debt crisis in future and argues: "This is not the moment, in the midst of a confidence crisis, to make statements that can do nothing but make Ireland's borrowing costs soar! This is the moment to show unity and solidarity. But is this Berlin's wish?"
Dutch financial commentator Jacob Schoenmaker argued on RTL, "it doesn't make sense to raise the eurozone aid package. The €750bn is already worked out. Add €300bn to €500bn to that, and you don't get there. Spanish public debt is €170bn. If speculators targeted Italy, it would be too big as well."
Luxembourg PM Jean-Claude Juncker is quoted in Reuters saying, "I am neither worried about the survival of the euro nor about the survival of the European Union. I am, however, concerned that in Germany the federal and local authorities are slowly losing sight of the European common good."
Conservative Home: Trefgarne Irish Times: Klau Economist: Bagehot Reuters WSJ: Roth European Voice: Editorial WSJ: Fidler Le Monde Irish Independent Irish Independent 2 Express Telegraph: Chivers Handelsblatt: Riecke FT.de: Rachman Expresso: Santos Jornal de Negocios: Feldstein Expansion: Calzada
The Express continues its campaign calling for the UK to leave the EU. An article in the paper quotes an Open Europe's survey showing that 54% of 1,000 quizzed company chief executives believed that the burden of EU regulation "outweighed" the benefits of the single market. The article also picks up some examples from Open Europe's list of top 50 cases of EU waste.
The Guardian reports that Learco Chindamo has been arrested for an alleged robbery four months after he was released from prison for a murder in 1995. Chindamo won an appeal three years ago against being deported to Italy - his native country - after his lawyers successfully argued that the deportation would have been illegal as Chindamo was from an EU country and had already lived in the UK for 10 years by 1995, in accordance with the EU's freedom of movement directive.
Commission releases new 2011 budget proposal with 2.9% increase in addition to a €3.5bn "contingency fund"
The Commission released a revised plan today for the EU's 2011 budget, proposing a 2.9% increase, as demanded by member states in contrast to the freeze originally demanded by the UK and the 6% increase supported by MEPs. The Commission notes that new concessions are made to MEPs in the form of a "contingency fund" of up to €3.5bn in the event of "unforeseen circumstances".
The Express criticises the Commission's new website "The EU: What's in it for me?" as a waste of £45,600 of public money. Open Europe's Stephen Booth is quoted saying, "The EU's public relations efforts verge on propaganda rather than genuine information, but citizens aren't fooled that easily".
The Economist's Charlemagne looks at the state of play of EU-US relations and argues: "The reality is that, to American leaders, 'Europe' means, first, NATO, then national leaders, and only lastly the EU [...] Despite the Lisbon treaty's grand foreign policy aspirations, the EU has not learned to think in geopolitical terms. Now the eurozone's woes have diverted attention inward again. Not surprisingly, many Americans find the EU infuriating."
EUbusiness reports that a Treasury spokesperson said yesterday that Chancellor George Osborne "will be writing to his EU counterparts to suggest new EU-wide transparency rules on bankers' bonuses" in line with the conclusions of last year's government-commissioned report.
Russian Prime Minister Vladimir Putin spoke yesterday of his ambitions for a Russia-EU free trade agreement, writing in Spiegel of "a unified continental market with a capacity worth trillions of euros." In response, German Chancellor Angela Merkel commented that "the steps that Russia has taken recently do not point in that direction."
The Guardian notes that a report from Counter Balance, a group of NGOs, claims that £932m of annual aid from the taxpayer-funded European Investment Bank to Africa and the Caribbean has disappeared into African banks, a Luxembourg tax haven and a Nigerian bank whose managing director was under investigation for fraud.Guardian
A petition has been launched urging that the European Citizens' Initiative (ECI) should be allowed to run for more time (18 months), and should not require signatures from more than one-fifth of member states.
Bloomberg reports that the EU may propose extending the disclosure rules for securities to bonds in a review of the Markets in Financial Instruments Directive.
DPA reports that Germany and several other states will pursue the implementation of a European patent on their own, under the concept of enhanced co-operation, after talks broke down due to resistance from Italy and Spain.
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