Euro-Zone News and Analysis
Press summary: Eurozone finance ministers postpone meeting as Greece fails to provide sufficient guarantees; Reuters: Spain could face fines for inflating deficit figures
From the Open Europe press summary:
Eurozone finance ministers have postponed their meeting to next Monday after the Greek government failed to provide all the guarantees required in order for the second Greek bailout to be approved – a written commitment by Greek party leaders that the austerity measures will be implemented regardless of who wins the next elections in April, and proof of an extra €325m in cuts in this year’s budget.
The leader of centre-right New Democracy party Antonis Samaras will send a written commitment to sticking to the austerity measures agreed with the EU/IMF/ECB Troika within the day, according to a party source quoted by Reuters. Former Greek Prime Minister George Papandreou is said to have already provided a signed undertaking. Meanwhile, the FT reports that, although the agreement on the second Greek bailout is still pending, eurozone finance ministry officials are moving ahead with plans for a Greek debt restructuring – which could kick off as early as Friday. According to a document circulated among finance ministry officials, eurozone countries must raise €93.5bn to finalise the debt swap. Of that amount, Greece’s private bondholders would get €30bn as “sweeteners” to take part in the deal, while €23bn would be used to recapitalise Greek banks, which will incur huge losses following the cuts in the value of their holdings of Greek bonds.
In an interview with Handelsblatt, Bundesbank President Jens Weidmann said that, while he would have no problem with the eurozone’s temporary bailout fund, the EFSF, purchasing eurozone government bonds from the ECB and national central banks in order to ease pressure on them, he is against central bank participation in Greek debt write-downs, arguing, “The crucial point is that we are not allowed to waive claims against a state. That would be a form of monetary financing of a government.” Weidmann also noted that eurozone governments are wary of the plans to let the EFSF buy Greek bonds from central banks. Les Echos reports that Belgian Central Bank Governor Luc Coene has confirmed that the ECB will redistribute any profits made on Greek bonds among eurozone countries, which will then decide whether to return the money to Greece as part of the second Greek bailout.
Separately, Reuters yesterday reported that the new centre-right Spanish government could face sanctions for inflating its deficit figures for 2011 in a bid to convince the European Commission to revise Spain’s deficit reduction targets downwards. El País notes that EU Economic and Monetary Affairs Commissioner Olli Rehn has dismissed the reports as “pure speculation”, and made clear that Spain must stick to its previous commitment to cutting deficit to 4.4% of GDP by the end of the year. Meanwhile, Portuguese daily Público reports that experts from the EU/IMF/ECB Troika will arrive in Portugal today for a new monitoring mission.
FT CityAM WSJ Times Mail Telegraph Guardian Guardian 2 Independent Irish Times EUobserver Reuters Süddeutsche Welt FAZ Il Sole 24 Ore WSJ WSJ BBC Kathimerini IHT IHT 2 Les Echos FT 2 FT 3 CityAM 2 BBC FT 4 CityAM 3 FAZ Welt Reuters Reuters 2 Expansión El País El Mundo Expansión Público Corriere della Sera Irish Times Handelsblatt Handelsblatt 2 Handelsblatt 3
Head of Bosch: Greece should leave euro and EU
In an interview with economic monthly Manager Magazin, Franz Fehrenbach, the head of Bosch - one of Germany’s largest corporations – argued that Greece was an “unbearable burden”, and that “with its phantom retirees and wealthy tax evaders, this country has no place in the EU”. He said that Greece ought to voluntarily leave both the eurozone and the EU, but that if it refused, it ought to be forced out through a change in EU law. Süddeutsche notes that his intervention is significant because of both the size of his company and the fact that German Chancellor Angela Merkel has sought out his advice in the past. Meanwhile, a survey of 300 German executives found that 57% believed it would be better for Greece to re-adopt the Drachma.
Manager Magazin Süddeutsche Bild