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Last minute Greek negotiations fail to yield agreement once again; Greek minister: EU subsidies contributed to Greeceā€™s economic downturn

09 Feb 2012

Late night talks between Greek political leaders failed to yield an agreement yesterday, meaning that Greek Finance Minister Evangelos Venizelos will head to Brussels today without a complete package for the second Greek bailout to present at the meeting of eurozone finance ministers. The remaining area of dispute is Greek resistance to further cuts in pensions, leaving around a €300m shortfall in the Greek budget. The EU/IMF/ECB troika is constantly setting new conditions for Greece’s rescue, which are almost impossible to satisfy, a Greek government source told FT Deutschland.

Under the latest draft agreement, Greece will cut minimum wages in the private sector by 22%, abolish permanent jobs in state enterprises and cut 150,000 jobs in the public sector by 2015 (15,000 of which will come this year), according to the WSJ. The draft also sees the Greek economy contracting by 4% - 5% this year, but still returning to growth in 2013. Reports suggest the ECB will not decide whether it will take part in the voluntary restructuring until the final plan is agreed, while S&P said yesterday that “the reduction [without the ECB]…is probably not sufficient debt relief to make debt sustainable.”

Irish Finance Minister Michael Noonan hinted yesterday that Ireland may look for similar concessions if the ECB accepts write-downs on its holdings of Greek bonds, although he later distanced himself from this position, according to the Irish Independent.

In an interview with FAZ, Greek Economic Development Minister Michalis Chrysochoidis argues that EU subsidies have contributed to Greece’s economic downturn, claiming that “over two decades, we have eroded our manufacturing basis, our industry and thereby our export capabilities…While we were taking EU money with one hand, we were allowed to borrow money for low interest rates, which we have also done excessively.”

Meanwhile, the German government is readying itself for three potentially decisive votes in the Bundestag next week to approve all aspects of the latest Greek package. Data from Germany’s Federal Statistics Office showed that German exports reached a new record in 2011, hitting €1 trillion in total for the first time – an 11.4% increase on 2010.

Dow Jones reports that, in a letter sent to the Commission on 26 January, Germany, the Netherlands, Finland and Austria warned against the creation of eurozone bonds, arguing that they would not solve the crisis and could "endanger the very core of cohesion in the euro area." The FT reports that the ECB’s long term lending operation has provided a boost to the purchases of corporate debt, easing the funding pressure on Europe’s private sector.

FT CityAM WSJ Times BBC Guardian Irish Times EUobserver Le Monde EUobserver 2 IHT Les Echos La Tribune EurActiv FT 2 CityAM 2 Telegraph Bloomberg EUobserver 3 Irish Independent Reuters Dow Jones FT 3 WSJ 2 Reuters 2 Handelsblatt German Statistics Agency FAZ: Plickert FAZ: Chrysochoidis FTD RTVE WSJ Review&Outlook FT Lex FT: Hausmann BBC: Hewitt Guardian: Garton Ash

Pawel Swidlicki: Every region wins if Europe’s funding regime is reformed
Responding to a previous op-ed in the Yorkshire Post by Conservative MEP Timothy Kirkhope, who disagreed with Open Europe’s recent report on EU regional policy, lead author of the report Pawel Swidlicki argues in a letter to the paper, “Timothy Kirkhope MEP has clearly misunderstood our report and proposals for reforming EU regional funding. Firstly, ending the circular flow of money between richer member states would no longer see an area like South Yorkshire, for example, paying in £2.79 into EU funds for every £1 it gets back. Instead, a domestically-run regional programme could give South Yorkshire the same amount it currently receives from the EU as well as an additional £288m over seven years [if the cash saved from rationalising the EU budget were invested back into the region].” 

Pawel goes on to argue, “Secondly, contrary to what Mr Kirkhope seems to believe, our proposal would leave all less advantaged EU member states better off: for example, Bulgaria and Romania, the bloc’s poorest countries, would save more than £2bn between them.” Open Europe’s report is also cited by the Telegraph, in an article noting that Britain could be asked for an additional £1bn in payments to the EU this year after the European Commission reported a £9.2bn hole in spending on structural funds projects.  
Open Europe research Yorkshire Post: Letters Telegraph

Writing for the Huffington Post in response to Shadow Europe Minister Emma Reynolds’ accusation that David Cameron exercised a ‘phantom veto’ over the fiscal treaty, Dominic Raab MP quotes Open Europe’s Director Mats Persson commenting, “Cameron can credibly tell Merkel: We want you to get on with the business of saving the euro...but stick to the rules, or it’s game over.” 
Huffington Post: Raab Open Europe blog Irish Independent

German Constitutional Court President: Loss of democracy on the road to saving the euro “would be tragic and fatal”
FAZ has published a speech given on Monday by Andreas Vosskuhle, the President of the German Constitutional Court, on democracy in Europe. Vosskuhle stressed that “the right [of the German Bundestag] to control the budget is a central element of democracy…Elected representatives must also, in a system of intergovernmental governance, retain the ability to keep control of fundamental budgetary decisions. European State Commissioners and European economic governments with far-reaching competences to supervise national budgets are therefore from the viewpoint of democracy not without danger as long as there isn’t a democratically legitimate European federal state…It would be tragic and fatal if we were to lose democracy on the road to saving the euro and to more integration.”
No link

In the Spectator, James Forsyth argues that David Cameron cannot avoid confrontation with the European Court of Human Rights and that his “hope that the Strasbourg question could be kicked into the long grass until the next election has been thwarted.”
Times: Cavendish Telegraph: Oborne Telegraph Sun

David Cameron will today join the “Northern Future Forum” of leaders from eight Scandinavian and Baltic EU and non-EU countries. The FT reports that, behind the scenes, the leaders will discuss ways to counter a ‘French model’ for the economy, as most of them are opposed to stricter regulation and the financial transaction tax.
FT Mail Telegraph

In its annual report published yesterday, the French Court of Auditors has warned that deeper cuts in public spending are necessary in order for France to meet its deficit targets, notes Les Echos. The Court also warned the French Central Bank over its exposure to the eurozone debt crisis.  
Les Echos FT  Irish Times Le Monde Les Echos

Former French Budget Minister Eric Woerth has been charged with corruption by judges investigating whether he accepted amounts of cash from L’Oreal heiress Liliane Bettencourt to fund Nicolas Sarkozy’s presidential campaign in 2007 exceeding the threshold allowed by French election law.
Les Echos Guardian Mail Telegraph

European Voice
has published details of the ten most expensive trips made by delegations of MEPs during 2010, including trips to Beijing, China, that cost an average of €16,088 per MEP and Buenos Aires, Argentina with an average cost per MEP of €26,296.
European Voice

Hannes Swoboda, leader of the Socialist group in the European Parliament, has indicated that his faction may oppose the Anti-Counterfeiting Trade Agreement (ACTA) treaty, suggesting that the “vague” text on monitoring and enforcement, and an unclearly defined role for ISPs could lead to his group opposing it, EUobserver reports.
WSJ EUobserver

AFP quotes Necdet Pamir, a former Deputy Director of Turkey’s TPAO oil company, saying that the EU’s flagship Nabucco project to bolster its energy security “was in a coma long before the South Stream agreement…Nobody dares to say Nabucco is already dead.”

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