El Economista: EU and IMF prepare credit line for Spain
Spanish newspaper El Economista reports that experts from the EU, IMF and the US Treasury are drawing up an emergency liquidity plan for Spain, including a credit line up to €250 billion. "The solution outlined for Spain will benefit from the resources of the bail-out fund of the Union and a contribution from the IMF, consisting of a credit line that the fund provides to countries with solvent economies but at risk of contagion", the article reads. However, Reuters quotes Amadeu Altafaj Tardio - a spokesman for EU Commissioner Olli Rehn - describing the report as "very bizarre", and adding: "I can firmly deny it".
Meanwhile, El Pais reports that the Spanish government will today launch its plans for labour reform, entering into force immediately, although none of the Parliamentary groups has guaranteed its support so far. As a result, the text might fall short of reaching the required majority when the Spanish Parliament votes on it next Tuesday.
AFP reports that the Commission yesterday told Spain that it must introduce extra austerity measures of around 1.75 percent of GDP in its 2011 budget to meet its deficit reduction targets.
The FT reports that Spanish banks are borrowing record amounts from the ECB, €85.6 billion last month, as they struggle to gain funding from international capital markets. Francisco González, chairman of BBVA - the second largest Spanish bank - is quoted in the Telegraph admitting that "the majority of the Spanish companies and financial groups are shut out of the international capital markets".
A leader in the FT also argues: "While the government can cut its own borrowing, it can do less to resolve the private sector's woes. Within monetary union, Spain has surrendered its ability to extend liquidity unilaterally. The private sector borrowed excessively during the boom - mainly to fund house building rather than productive investment. Consequently, there are a lot of bad debts, in both the corporate and banking sector. These undermine the ability of healthy companies to attract funding".
The Telegraph notes that Spain is currently also on a collision course with Germany - which provides for the lion's share of the new eurozone rescue fund - with regard to the release of the results of the EU stress tests for major banks.
New Slovakian government could hold up €750 billion eurozone bailout
EUobserver reports that the emerging new leadership in Slovakia has said the country may not contribute its share of the €110 billion rescue package for Greece, and will not add its signature to the €750 billion eurozone support mechanism. A senior eurozone official said that signatures from all eurozone members are required to enact the support mechanism.
Conservative politician Iveta Radicova, who is to become the next Prime Minister if her party manages to form a coalition, described the €750 billion rescue fund during the pre-election debates as "bad, dangerous and [the] worst possible solution." She also reiterated yesterday that she is against Slovakia providing any financial support to Greece.
Meanwhile, Le Figaro reports that the European Commission has decided not to pursue sanctions against France for exceeding the maximum budget deficit level, however, new procedures were opened against Finland, Denmark and Cyprus. The FT reports that Poland's new Central Bank Governor Marek Belka has praised German budget discipline, saying: "We should not forget that the growth and stability pact talks about 3 per cent not as a goal but as a maximum".
Italy abandons extradition bid of UK resident amid calls for reform of EU fast-track extradition
The BBC reports that the Italian authorities have abandoned a bid to extradite a British resident for murder after admitting that the man, who had been tried and convicted in absentia, had been the victim of stolen identity, and was not in Italy at the time of the crime. The man was arrested in the UK in June last year on a European Arrest Warrant.
Speaking to the BBC Today programme, Jago Russell of Fair Trials International said: "I think in a case like this, there ought to be a power for the British courts to say No to an extradition request...we need to cooperate with the rest of Europe but we can't do that at the expense of basic rights, and what we're arguing for at Fair Trials International is that Europe look again at this fast-track system of extradition, that was rushed through post 9/11 with very little thought and consideration, and that they actually work together and figure out what basic safeguards need to be incorporated to stop terrible mistakes like this happening in future."
Commission says that it is the "economic government of Europe"
Following Angela Merkel and Nicolas Sarkozy's meeting on Monday to reach agreement on EU economic governance, Commission President José Manuel Barroso has reiterated the Commission's primacy in economic policy declaring that, based on the EU treaties, it is "the economic government of Europe", reports the Irish Times.
The heads of the four main political groupings in the European Parliament have also criticised the intergovernmental approach of EU leaders, suggesting they are by-passing the EU institutions. ALDE group leader Guy Verhofstadt said: "We think the European Commission should be in the driver's seat for economic governance - not the European Council, not the member states". EPP group leader Joseph Daul added: "There is only one useful level of decision-making and that is the European level".
Two EP resolutions, expected to be passed today, will contain suggestions for the EU's 2020 growth strategy. MEPs say there should be a 'carrot and stick' approach to force member states to meet the goals. They will also call for the creation of a European Monetary Fund, with eurozone countries contributing in line with their GDP and fined according to their budget deficit.
An article in the FT looks at MEPs' new powers under the Lisbon Treaty, and notes: "Privately, Commission officials and diplomats complain about parliament's grandstanding and worry that politicised MEPs will hurt policymaking more than they help it."
"Appearance of unity" between Merkel and Sarkozy restored
The headline on the front page of Le Monde reports that Germany is winning the battle over France to "impose its vision of economic Europe", following Monday's meeting between Angela Merkel and Nicolas Sarkozy. According to the Telegraph, the power struggle has led to a new low in Franco-German relations, after Merkel slapped down Sarkozy's call for a eurozone economic government.
FAZ reports that when Merkel conceded to an 'economic government' for the EU-27, it was only a rhetorical concession to Sarkozy, and there was only "an appearance of unity" between the two.
In an interview with the newspaper, Henry Guaino, an adviser to Sarkozy, said that a "transfer union" in the EU will not be acceptable, as "the flight forward into a European federal State will not succeed...There is no European people, so there is no possibility for financial transfers at the EU level." He added that every government should question the effects of its decisions on the currency union, saying "a currency union cannot survive when the discrepancies between the member states become too big."
CSU calls on the EU to save money, starting with EEAS
FAZ reports that the CSU General Secretary, Alexander Dobrindt, has called on Commission President José Manuel Barroso to control EU spending, saying: "If all member states have to save, then so does the EU. First of all, the EU Foreign Service, planned by Mrs Ashton, has to be cut down. Another €80 bn and 8,000 employees do not fit into the time of the economic and financial crisis."
Meanwhile, EPP leader Joseph Daul has warned that if EU Foreign Minister Cathy Ashton launched the External Action Service without receiving EP approval, it would amount to "a declaration of war".
MEPs threaten second veto on US bank deal
EUobserver reports MEPs have threatened to veto a newly negotiated bank data deal which would allow the transfer of European banking data to the US as part of anti-terrorist investigations. The debate hinges on the dispute over bulk data, which MEPs want filtered in the EU, instead of sending it in bulk to the US for processing. MEPs vetoed a previous version of the deal in February.
Die Welt reports that a new opinion poll for ARD-DeutschlandTrend has found that only 40 percent of Germans are happy with Angela Merkel's work, eight points down on the beginning of June, and 18 points down since the beginning of May.
Writing on the Guardian's Comment is Free website Sabine Rennefanz, correspondent for Berliner Zeitung argues that "If Merkel's candidate [for German President], Christian Wulff - the bland CDU first minister of Niedersachsen (Lower Saxony) - doesn't get enough votes, it will be the end of this coalition government and new elections would have to be held."
French reforms were unveiled today to raise the retirement age from 60 to 62 in order to balance France's budget deficit of 7.5% of GDP by 2018.
The Telegraph notes that a report from the EP's Economic and Monetary Affairs Committee, drafted by UK Labour MEP Arlene McCarthy, has suggested a cap on bankers' bonuses. Under the proposal, bankers would be barred from obtaining bonuses larger than their salaries.
A new survey has shown that currently only 54.2 percent of Czechs favour the introduction of the euro, down from 63.8 percent in February.
In the interview in Le Figaro, former Commission President Jacques Delors said: "We say that the firemen... acted with a delay, partly due to the German authorities, which exacerbated the crisis, increased the amount of the invoice and fed Euroscepticism".
FT Deutschland comments that Belgium is a model of Europe, arguing: "the state of Flemish and Walloons EU threatens to break up due to separatism and political failures. The citizens are turning its back to it. The EU is suffering from the same symptoms."
FAZ today argues against the decision to let Estonia enter the eurozone, writing: "it would be advisable to postpone their accession in view of the country's inflation rate, which only fulfils EU criteria because of the recession... It is in the interests of a stable currency to ensure that the rules are once more respected. False laxity is simply the wrong attitude here."
Reuters columnist James Saft writes in the IHT: "The taboo against default - the cleanest, surest way to a sustainable base, and one which could have been combined with forcing the countries involved to behave responsibly - is because default would have opened the far bigger can of worms that is the European banking system, which is critically undercapitalised and which has made far less progress than its US peers in writing down debts."
Brendan Barber, TUC General Secretary said on the BBC Today Programme that the UK government must avoid a "dance with death" by entering into a programme of spending cuts along with other EU member states.
Italian news agency ANSA reports that Italy is ready to veto any European Council proposal on budgetary rules unless the notion of "aggregate debt" (i.e. the sum of public and private national debt) is explicitly mentioned as the new criterion for the evaluation of member states' debt.
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