Daily Press Summary
Second bailout still short of satisfying Greek funding needs; IMF reduces its share of second Greek bailout
Ahead of today’s meeting of eurozone finance ministers in Brussels, the FT reports that Greece requires another €136bn in funding from the second bailout, on top of the €34bn remaining from the first bailout, to cover its €170bn funding gap over the next few years. Germany, the Netherlands and Finland have set a ceiling of €130bn on the size of the second Greek bailout. European officials are still exploring how to close the €6bn gap, although reports this morning suggest it will be done through a combination of a write down on Greek debt held by national central banks and a reduction in the interest rates charged on the initial Greek bailout, while discussions are on-going over the redistribution of profits from the ECB’s holdings of Greek debt. Additionally, the €170bn funding required does not include the €35bn which will be needed to provide Greek banks with assets to use as collateral at the ECB in the aftermath of the restructuring.
In another blow to the eurozone, the WSJ reported on Friday that the IMF share of the second bailout is only likely to be €13bn, proportionately much smaller than its contributions to the previous bailouts. Under the current plan the Greek debt to GDP ratio is expected to be 129% in 2020, still well above the target of 120%. Despite the remaining issues, the bailout is expected to be approved at today’s meeting of eurozone finance ministers, allowing the voluntary restructuring to get underway, with bonds aiming to be exchanged between 8-11 March.
The Sunday Telegraph reported that German Finance Minister Wolfgang Schäuble inwardly accepts that Greece will most likely not be able to enact the reforms required under the second Greek bailout, according to European officials. The article suggests that Schäuble believes that Greece would be better off defaulting fully, while contagion would be limited since such a move has been expected for some time.
China and Japan have said that they are unlikely to increase their contributions to the IMF unless the size of the ESM, the eurozone’s permanent bailout fund, is increased. FTD reports that ECB Executive Board member Jörg Asmussen supports combining the EFSF and the ESM, the eurozone’s temporary and permanent bailout funds. Separately, Kathimerini reports that PASOK will elect a new leader on March 18. Eurozone leaders will hold a meeting on 2 March during the scheduled regular EU summit to discuss the eurozone crisis.
Open Europe’s briefing setting out the ten unanswered questions surrounding the second Greek bailout is quoted by Belgian daily De Standaard and Greek business daily Imerisia and featured on Zerohedge.
FT CityAM WSJ WSJ 2 Times Irish Times Le Monde Express Irish Times Guardian BBC Telegraph Telegraph: Evans-Pritchard Mail FT 2 IHT Le Figaro EUobserver FT 3 FT 4 BBC Kathimerini EUobserver Standaard Imerisia Reuters YLE FTD FTD 2 Reuters 2 Eurotopics Kathimerini 2 Süddeutsche Welt FAZ Welt Süddeutsche Bild FAZ Sunday Telegraph Sunday Telegraph Sunday Times Observer
El País reports that hundreds of thousands of people took to the streets in 57 Spanish cities yesterday in protest against the reform of the labour market recently adopted by the Spanish government.
El País Reuters Le Figaro FT BBC
Open Europe’s Research Director Stephen Booth appeared on the BBC’s Sunday Politics show discussing the possibility for the UK to opt out ‘en bloc’ in 2014 of up to 130 EU crime and policing laws adopted before the entry into force of the Lisbon Treaty.
Open Europe research BBC: Sunday Politics Show
German coalition partners fall out over nomination for new German President
Former East German human rights activist Joachim Gauck has been nominated by the German government and the SDP and Green opposition parties as the new President, following Christian Wulff’s resignation last week. It is widely reported in the German press that during the parties’ behind the scenes negotiations, the junior coalition party, the FDP, forced Chancellor Angela Merkel to accept Gauck as a compromise over her preferred ‘establishment’ candidates.
Meanwhile, support for Germany’s Pirate party has reached 9% according to an Emnid poll for Bild am Sonntag. Chancellor Angela Merkel’s CDU/CSU party leads on 35% ahead of the SDP on 27%, while the Greens and Die Linke are on 14% and 7% respectively. The FDP are on 3%, meaning they would fail to secure any Bundestag seats.
Guardian BBC Reuters Spiegel Spiegel 2 Süddeutsche Welt Welt 2 Welt 3 Bild Bild: Döpfner FAZ FAZ FAZ: Altenbockum
At their meeting tomorrow, EU finance ministers are expected to endorse two draft regulations giving the European Commission greater surveillance powers over eurozone governments’ annual tax and spending plans, reports the FT.
Eurozone comment round-up
In the FT, John Dizard writes, “I’m not entirely sure a Greek default/capital controls/euro departure would create such an insuperable challenge...The question is really political: whether the euro member countries with current account surpluses are willing to commit them to cover the capital raising needs of the current account deficit countries. Guess we’ll find out.”
In the WSJ, Simon Nixon argues, “The eurozone needs to acknowledge that there can be no solution to the euro crisis until the fate of its banking system is separated from that of its sovereigns. That will require the creation of pan-European deposit insurance and ultimately Eurobonds to provide banks with an alternative risk-free asset.”
Writing in Handelsblatt, German FDP MP Frank Schäffler notes that the new draft of the Treaty establishing the eurozone's permanent bailout fund European Stability Mechanism (ESM) provides the ESM with a banking licence which allows it to be funded by the ECB, and argues, “This is the open door for major inflation through monetisation of sovereign debt.”
Handelsblatt: Schaeffler Independent: Leader FT: Munchau FT: Dizard FT Editorial FT: Spiegel CityAM: Meehan WSJ: Luskin & Roche Kelly WSJ: Bialik WSJ: Nixon Guardian: Elliot FT Weekend: Barber Saturday's Times: Parris Süddeutsche: Zydra Süddeutsche: Hagelüken Observer: Cohen Independent on Sunday: Cockburn Sunday Telegraph: Halligan Sunday Telegraph: Booker
Speaking after Friday’s Anglo-French summit in Paris, French President Nicolas Sarkozy said, “[David Cameron and I] have had divergences of views but perhaps, had I been in David Cameron’s position, I would have defended British interests in exactly the same manner as he has” at last December’s EU summit.
Saturday's Telegraph Saturday's Mail Saturday's Independent Saturday's Times
At the European Parliament’s plenary session last week, MEPs voted to freeze their allowances in cash terms until mid-2014, and to cap the travel budget at the present level.
City AM reports that plans in the UK budget to launch a £20bn National Loan Guarantee Scheme to help banks lend to small businesses may fall foul of EU state aid rules.
According to a new opinion poll published by Le Figaro over the weekend, the gap between the Socialist presidential candidate François Hollande and Nicolas Sarkozy has narrowed to only 2%. Hollande is credited with 29% of votes in the first round, followed by Sarkozy on 27%, far-right Marine Le Pen on 16.5%, and MoDem leader François Bayrou on 13%.
Le Monde Le Point Guardian BBC Les Echos Le Monde 2 Le Point FT Editorial
Iran stopped its oil exports to the UK and France on Sunday in retaliation against the recently adopted EU-wide oil embargo, due to become effective on 1 July.
Times Irish Times Monde Liberation Le Point
In an opinion piece in the Telegraph, the Mayor of London Boris Johnson argues that the EU’s system of tariffs on imported sugar cane designed to help French and German EU sugar beet farmers is costing jobs at British sugar refineries.