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Negotiations continue in Greece as Germany puts forward new plans to split bailout funds; Greek PM calls for research into consequences of Greek exit from eurozone

07 Feb 2012

Talks between the leaders of the Greek political parties will resume later this afternoon, after Greek Prime Minister Lucas Papademos’ talks with the EU/IMF/ECB troika late into the night yesterday. Following the talks, Greek Finance Minister Evanagelos Venizelos was surprisingly blunt, saying, "Unfortunately the negotiations are so tough that as soon as one chapter closes, another opens." Some progress was made towards a deal between Greek political parties yesterday as they agreed in principle to 15,000 additional public sector job cuts, a reduction in the minimum wage and supplementary pensions. However, these cuts still do not meet the demands made by the troika, while the details of how they will be implemented are still to be ironed out.

German Chancellor Angela Merkel is becoming increasingly exasperated at the delays, saying yesterday, "I honestly can't understand how additional days will help. Time is of the essence. A lot is at stake for the entire eurozone." France and Germany yesterday put forward a new demand, endorsed by European officials, for some of the Greek bailout funds to be paid into a special escrow account which would focus on paying off Greek debt. Some funds would still go directly to Athens, the flow of which could be adjusted depending on the success or failure of Greek reforms (as is the case now). ARD comments that the proposal to send Greek bailout funds to a separate account comes down to "a savings Commissioner through the backdoor."

Dow Jones reports that Papademos has asked the Greek Finance Ministry to examine the economic consequences of Greece leaving the euro, according to comments by a member of the Greek socialist party. Meanwhile, Greek EU Commissioner Maria Damanaki said in an interview with To Vima that the implications of a Greek eurozone exit are being studied by the private sector. In an interview with De Volkskrant, Dutch EU Commissioner Neelie Kroes has said that the eurozone could handle a Greek exit, arguing, "People always say: if you let one country leave or ask it to leave, then the whole building collapses. But that's just not true."

On his Coulisses de Bruxelles blog, French journalist Jean Quartemer claims that Greece’s 300 MPs are the best paid in Europe, with a post-tax monthly of salary €8,500. The MPs also receive monthly expenses allowances of €4,900, a €1,200 allowance for participating in parliamentary committees, a €1,800 allowance for office expenditure, while transport is free.

A new Goldman Sachs report seen by Portuguese daily Jornal de Negocios warns that Portugal will not be able to return to the markets in 2013, and will have to ask for an extra €30-50bn to cover its financing needs until 2015. However, according to the report, Portugal will not need debt restructuring.
Open Europe blog FT Reuters Welt Süddeutsche Süddeutsche 2 FT 2 CityAM WSJ IHT Irish Times To Vima: Damanaki Dow Jones FT 3 BBC Guardian Times Telegraph Independent Express Irish Times 2 Irish Independent Welt Welt 2 Süddeutsche Bild: Becker FT 4 CityAM 2 FT 5 Reuters 2 Coulisses de Bruxelles FT: Mackintosh WSJ: Melchiorre Guardian: Kappoor & Bofinger De Volkskrant Kathimerini ARD DPA Handelsblatt Le Figaro Les Echos Jornal de Negocios

Police warn against opting-out from the European Arrest Warrant
The FT reports that Allan Gibson, a police commander at Scotland Yard, has warned that if the UK were to opt out of the European Arrest Warrant (EAW) using other extradition agreements “would take a lot longer, be less certain and it would definitely be more expensive.” Dominic Raab MP, one of over 100 MPs who signed a letter endorsing the conclusions of Open Europe’s recent report, which argued that the UK should use its right to opt-out of 130 EU crime and policing measures including the EAW, said that we should not “be subjecting our citizens to increasingly authoritarian EU measures – such as the European Arrest Warrant or data-sharing schemes – just because the police like them.” Andrea Leadsom MP, Co-Chair of the APPG on EU reform, said it would be “better to move earlier rather than later” in exercising the block opt-out and that the Government could then opt back in to measures that are deemed vital to British interests.

In the Telegraph, Philip Johnston argues that the UK should use its opt-out in order to stop the ECJ gaining jurisdiction over the EAW and other measures identified in Open Europe’s report. He concludes that it is a “mystery why a Government that has made so much noise about repatriating powers has failed to make more about this block opt-out.”
Open Europe Research FT Telegraph: Johnston

Abu Qatada, a radical Muslim cleric described as “Osama bin Laden’s right-hand man in Europe”, will be released on bail within days, after the Strasbourg-based European Court of Human Rights ruled that he could not be deported to Jordan because of the risk that evidence obtained using torture could be used against him.
Telegraph Mail Sun Express Express: Editorial

France and Germany aim to harmonise their corporate tax rates by 2013;
Merkel snubs French Socialist presidential candidate
French Finance Minister François Baroin and his German counterpart Wolfgang Schäuble yesterday unveiled a ‘Green Paper’ detailing plans for Franco-German tax convergence. According to the document, France and Germany will aim to harmonise their corporate tax rates by 2013, reports Le Figaro. Meanwhile, in his first joint TV interview with German Chancellor Angela Merkel yesterday, French President Nicolas Sarkozy criticised the Socialist presidential candidate, François Hollande, over his plan to renegotiate the new European fiscal treaty on budgetary discipline if elected, arguing that the signature of a treaty is “a commitment of the [French] state, not a political commitment.”

Speaking on French radio RTL this morning, Hollande’s special advisor Jean-Marc Ayrault confirmed that the Socialist presidential candidate had requested to meet Merkel before the election, scheduled for 22 April. However, the German Chancellor yesterday said that she was not planning to meet Hollande in the short term, adding, “Heads of state have more important things to sort out.” Meanwhile, the joint appearance attracted criticism from German opposition parties, with SPD chairman Sigmar Gabriel, describing it as "rather embarrassing", while Green chairman Jürgen Trittin warned Franco-German relations could be permanently strained.
Les Echos Le Monde Le Monde 2 Le Figaro Les Echos BBC Guardian Telegraph Irish Times IHT Les Echos Le Figaro Welt Bild Welt FAZ Süddeutsche Süddeutsche: Brössler

Swedish MP: Commission contradicting its own analysis on the FTT
In an article in Swedish daily Svenska Dagbladet, Karl Sigfrid, an MP for the governing Moderaterna party, responds to an article in the same paper by EU Tax Commissioner Algirdas Šemeta who argued in favour of an EU financial transaction tax. Sigfrid argues, ”Šemeta wants to kill off three alleged myths, the first being that a financial transaction tax would give us fewer jobs and lower growth. The interesting thing about this myth is that it’s from the EU Commission’s own analysis, which says that the reduced productivity resulting from the EU-tax is just as large as the income generated from the tax, and probably even greater.”

Sigfrid concludes, “The article by the Tax Commissioner hints that if we only get an EU tax, indebted countries will not need to consolidate their budgets to any greater extent. Instead of trying to sell us miracle cures, it would be better if the Commission emphasised the importance of work and responsibility.” Meanwhile, writing in City AM, Conservative MEP Syed Kamall argues that the proposed FTT could cost a typical pensioner upwards of £15,000.

Separately, the French government will unveil its proposed financial transaction tax at the Council of Ministers meeting tomorrow. The 0.1% tax is more diluted than previously thought, as it applies only to companies based in France with a stock market evaluation exceeding €1bn. It is expected to raise just over €1bn a year.
SvD: Sigfrid CityAM: Kamall Les Echos La Tribune

The European Banking Authority meets this week to determine whether 30 banks are on track to raise €115bn by June, to meet the Core Tier-one capital target of 9% set by the authority in December, although it is currently unclear to what extent this target can be considered realistic.
FT CityAM FT 2 FT Editorial Le Monde WSJ

Following Romanian Prime Minister Emil Boc’s resignation yesterday after weeks of protest against his government’s austerity measures, Mihai Razvan Ungureanu, the former head of Romania’s Foreign Intelligence Service, has been appointed as his replacement.
Guardian Times Irish Times BBC

Following China’s refusal to join the EU’s new carbon tax scheme, a spokesman for Connie Hedegaard, Commissioner for Climate Change, said that the EU will not back down and that they are “confident that Chinese airlines will comply with our legislation.”
FT Times Irish Times IHT EUobserver

Die Presse reports that former Austrian MEP Ernst Strasser, who was forced to resign after the Sunday Times’ revealed the ‘cash for amendments’ scandal in the European Parliament, has claimed in an interview with Austrian TV that the video evidence was “deliberately tampered with by Murdoch’s people” as the mouth movements and the text do not match up exactly.
Die Presse

On the 20th anniversary of the signing of the Treaty of Maastricht, former Dutch Foreign Minister Ben Bot commented that “My expectations were high…I thought we'd get the three branches – economic, justice and foreign affairs – under one roof. It didn’t work. There were countries that didn’t feel the time was ripe.”
RNW

EUobserver reports that the Czech Republic has become the second EU state after Poland to stop the ratification of the controversial Anti-Counterfeiting Trade Agreement (ACTA).
EUobserver

World

UK Foreign Secretary William Hague has said that a new ‘contact group’ comprising the EU, the Arab League and other countries would come together to “co-ordinate intensified diplomatic and economic pressure on the regime, and to engage with Syrian opposition groups committed to a democratic future”.
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