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Greece moves towards coercive restructuring as deadline approaches; Merkel concerned by rising Portuguese borrowing costs

08 Mar 2012

The FT reports that 53% of Greek bondholders have agreed to sign up to the voluntary restructuring deal, taking Greece both over the 50% quorum level it needs to force a vote on whether to trigger the use of collective action clauses (CACs) and indicates that such a vote would be likely to pass. Kathimerini reports that the participation rate has reached 60%, while BankingNews.gr puts it as high as 77% - 79%. Even if the CACs are triggered, it is still unclear whether the participation rate will be equal to that desired under the current bailout plan. This is because investors holding Greek bonds issued under foreign law (around €28bn) may still refuse to take write-downs, despite threats from Athens to not payout on these bonds.

Open Europe’s Raoul Ruparel is quoted on the front page of City AM saying, “The government will not reach the 95% it wanted to declare the bond swap ‘voluntary,’ but it will probably get over [the threshold for triggering CACs]…This is the outcome everyone has worked for six months to avoid – for such a small write-down, this deal represents a lot of wasted time and effort.”

German Finance Minister Wolfgang Schäuble said in speech at the European University Institute in Florence yesterday that, “maybe you could say it was the wrong decision for Greece to join the common European currency…Greece has failed for a long time to deliver what is needed to be in a common currency.” Schäuble added that he had openly discussed the prospect of a Greek exit from the eurozone with Greek Finance Minister Evangelos Venizelos. A conference call of eurozone finance ministers will take place tomorrow at 1pm to discuss the progress of the Greek restructuring plan.

German Economy Minister Philipp Rösler is quoted by Les Echos criticising Greece for not reducing bureaucracy or improving the business climate, despite Germany offering assistance. Rosler said, “The help has barely been accepted, very little has been achieved, the Greeks are clearly not making this a priority. The Greeks claimed during my last visit [in October] that they would quickly solve the oldest problems, unfortunately, practically no progress has been made.”

Reuters reports that, according to sources involved in a closed-door meeting of MPs, German Chancellor Angela Merkel said that the “risk premiums on Portuguese bonds are a worry” and confirmed that she would not increase the size of the ESM, the permanent eurozone bailout fund, outright but did not rule out combining it with the EFSF, the temporary bailout fund.

Münchner Merkur reports that German government MPs have called on the finance ministry to provide monthly updates of German exposure to eurozone bailouts. In FAZ, former ECB chief economist Jürgen Stark warns that the ECB’s balance sheet is of doubtful quality, saying, “The balance sheet of the [ECB] is not only gigantic in its dimension but its quality is also appalling.”
FT WSJ CityAM Telegraph Guardian BBC Irish Independent FT 2 BankingNews.gr Monde La Tribune La Tribune 2 La Tribune 3 Les Echos Les Echos2 Liberation Les Echos 3 EUobserver IHT Le Figaro Kathimerini Kathimerini 2 Reuters Mail Monde 2 Irish Independent Irish Times Irish Independent 2 Kathimerini 3 Expansión Expansión 2 Kathimerini 4 ASCA Jornal de Negócios Les Echos 4 La Tribune 4 Les Echos 5 FT: Roubini Münchner Merkur Handelsblatt Handelsblatt 2 BBC: Hewitt FT: Milne Le Figaro: Robin

Sarkozy to exit politics if he loses election
In an interview on RMC this morning, Nicolas Sarkozy announced that he would quit politics if he lost the presidential election, saying “I would do something else… exactly what, I am not yet sure”. Sarkozy currently trails in the first round polls on 28%, two points behind Socialist candidate Francois Hollande.

Rzeczpospolita reports that Polish PM Donald Tusk has been criticised for cancelling tomorrow’s scheduled meeting with Francois Hollande, as sources from Tusk’s Civic Platform party unofficially confirmed that the decision was partially motivated by Hollande’s opposition to the ‘fiscal treaty’ and a desire not to further inflame relations with President Sarkozy.
Monde Nouvel Observateur Le Figaro Rzeczpospolita Liberation

Ahead of tomorrow’s meeting of EU environment ministers, the Polish Government has said it is prepared to veto a proposal for a 25% cut in emissions from 1990 levels by 2020 - an increase on the 20% agreed back in 2008 – as well as the long-term target of a 80-95% reduction by 2050.
FT EurActiv European Voice Reuters Gazeta Wyborcza Rzeczpospolita Trouw

In a feature piece on EU aid spending in the Mail, Ian Birrell cites last year’s Open Europe report on the EU which found that European countries receive £6.64 per capita in EU aid compared with £2.49 per capita in sub-Saharan Africa, and just 29p per capita in central Asia.
Mail: Birrell Open Europe Research: Aid Open Europe Research: ENP

Following the EU Commission’s withdrawal of its video promoting enlargement which was accused of being racist, Open Europe’s Raoul Ruparel is quoted criticising the video in the Irish Independent, Bulgarian daily Sofia Echo, Romanian daily Gandul, Czech news website Romea and Slovakian news website Topky.
Irish Independent Gandul Sofia Echo Romea Topky

Dutch Secretary of State for Economic Affairs, Henk Bleker, has said that it could take the European Court of Justice 18 months to rule on the legality of the controversial Anti-Counterfeiting Trade Agreement (ACTA).

The EU’s Internal Market Commissioner Michel Barnier yesterday put forward proposals to harmonise the regulation of cross-border securities trading, including cutting settlement timeframes and establishing a common regulatory framework for the region's central securities depositories.
EurActiv European Voice

During Prime Ministers Questions yesterday, David Cameron said that the UK is “working extremely hard” to mitigate the impact of new European rules for insurers, the so-called Solvency II Directive, adding that it was a “good example of ill thought-out EU legislation endangering a great British business [Prudential] that should have its headquarters in the UK”.
City AM

In a speech in the Hague yesterday, UK Deputy Prime Minister Nick Clegg defended the European Arrest Warrant, saying that although reform is needed to make sure its use is “proportionate”, “the principle remains: crime crosses borders; crime-fighting must too.”
Irish Times

The UK Parliament’s joint committee on the Government's National Security Strategy (NSS) has called on the UK government to draw up plans to deal with a collapse of the eurozone "as a matter of urgency", describing the full or partial collapse of the single currency area as a "plausible scenario".
Press Association BBC


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