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Greece secures €206bn bond swap after holdout investors are forced to participate; ECB Chief hits back at German criticism

09 Mar 2012

Greece secures €206bn bond swap after holdout investors are forced to participate;
ECB Chief hits back at German criticism
Greece has secured a participation rate of almost 96% in the bond swap with its private creditors. Almost 86% of private bondholders accepted the debt swap voluntarily, while the rest were forced to participate after Greece activated Collective Action Clauses (CACs). The success of the bond swap clears the way for Greece to get its €130bn second bailout. Eurozone finance ministers are expected to take a final decision in a conference call this afternoon.

Meanwhile, new figures released by the EU’s statistics body Eurostat show that Greece’s youth unemployment rate has reached 51.1% – the highest in the eurozone. Open Europe’s Director Mats Persson is quoted in the Telegraph saying, “Greece is just not in a sustainable position on several counts. The extreme level of youth unemployment shows that the austerity cuts are fighting off any chance the country has of recovering.” Open Europe’s daily press summary reporting on German Finance Minister Wolfgang Schäuble’s remarks on Greece at the European University Institute in Florence is quoted by Austrian TV ORF and Austrian daily Wiener Zeitung, while Open Europe’s recent briefing on the second Greek bailout is quoted by the Australian.

During the press conference following the monthly meeting of the ECB’s Governing Council, ECB President Mario Draghi hit back at German Bundesbank Chief Jens Weidmann’s criticism of the ECB’s long-term loans to European banks. Draghi called the two rounds of Long-Term Refinancing Operations (LTROs) “an unquestionable success”, stressing that Germany had never objected to LTROs within the ECB’s Governing Council. “I think that there is nothing to gain by fighting or arguing publicly outside the [ECB] Governing Council”, he added.

Separately, Expansión reports that experts from the European Commission have travelled to Madrid to investigate the reasons of Spain’s failure to meet the agreed deficit reduction targets. A spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn said that the Commission is seeking clarifications about why Spain’s deficit figures for 2011 “are changing continuously”.
IHT Kathimerini Independent Le Figaro Il Sole 24 Ore blogs: Romano EUobserver Kathimerini 2 Jornal de Negócios Expansión 2 Il Sole 24 Ore City AM FT 3 FT 2 FT FT Alphaville Welt Süddeutsche FAZ Telegraph IHT Le Figaro La Stampa WSJ FT 4 FT 5 Welt Expansión Jornal de Negócios El Mundo El Mundo El País EurActiv European Voice Guardian Le Monde Le Monde 2 Telegraph Irish Times BBC Irish Independent Times Les Echos Les Echos2 Les Echos3 Nouvel Observateur FAZ Telegraph European Voice Irish Times Le Monde Times Wiener Zeitung ORF The Australian FAZ FTD FTD 2

Ruparel: Bond-swap does not leave Greece in a much better position
In an op-ed in City AM, Open Europe’s Raoul Ruparel argues that despite the apparent success of the bond-swap, there is “one nagging detail: this plan will not save Greece… Under the proposals, the total level of budget cuts Greece is expected to undergo stands at 20 per cent of GDP by 2013. The cuts are deeper and faster than any country has attempted – successfully or otherwise – in living memory... Looking at these figures, it is clear that Greece will inevitably need either another bailout or be forced to default on its outstanding debt. But here’s the kicker: in a few years’ time, there will barely be any banks or other bondholders left to foot the bill from a Greek default. It will fall almost entirely on taxpayers.

In a comment piece, FAZ’s eonomics editor Philip Plickert criticizes the ECB’s head Mario Draghi, arguing that “Citizens will ask themselves what is it that Draghi stands for: Is it his primary goal to save states and banks with cheap money? Or is the ECB’s primary goal still price stability? What matters are deeds, not words“.
CityAM: Ruparel FAZ: Plickert Telegraph: Leader Handelsblatt: Leader FTD: Leader Welt: Held

A joint paper agreed by seven EU member states including the UK urges Greece to "live up to its responsibilities" in cracking down on illegal immigration via its border with Turkey, which has led to the estimated arrival of around 55,000 illegal immigrants in the past year. A number of member states have called for free movement to be suspended and passport controls to be re-introduced between the EU and Greece unless the situation improves.
Telegraph Tagesschau EurActiv European Voice

Secret deal over fiscal treaty hatched to win over UK support for ‘fiscal treaty’;
Hollande firms up commitment to renegotiate treaty
The FT reports that Jose Manuel Barroso, President of the European Commission, planned to replace Michel Barnier, the EU’s top finance regulator with a UK nominee in a bid to secure David Cameron’s support for the euro ‘fiscal treaty’ and soothe City concerns. Barnier would replace Baroness Ashton as EU representative for Foreign Affairs, a portfolio change she was said to have welcomed. The deal eventually fell through, as officials did not believe it would satisfy Conservative backbenchers.

Meanwhile, the French Socialist party affirmed this morning that Francois Hollande would seek a full renegotiation of the fiscal treaty, and would not accept “cosmetic statements” on growth. Jean-Marc Ayrault, parliamentary President of the Socialists revealed that Hollande would seek to finance growth initiatives by issuing Eurobonds, and would travel to Germany once elected to launch negotiations with Angela Merkel. “The aim”, he explained, “is to develop a European growth strategy without deteriorating the financial situation of each member state”, adding that the “EU does not have any debt”.

Respondents of a 20 minutes poll surveying perceptions of EU leadership in 5 Member States preferred Angela Merkel over David Cameron, Mariano Rajoy, Mario Monti and Nicolas Sarkozy, who received 58% of negative approval ratings.
Le Monde Le Monde2 FT AFP Les Echos 20 minutes

Syed Kamall MEP: EU should oppose “anti-business agenda” in trade deals
Open Europe and the Globalization Institute held a debate at the European Parliament in Brussels on Wednesday, entitled “Barriers to free trade between the EU and Asia”, which discussed why the EU needs free trade more than ever. The event was hosted by Dr Marek Migalski MEP (ECR Group, Poland), and chaired by Pieter Cleppe, head of Open Europe’s Brussels office.

Speaking at the debate, Signe Ratso, Director at the European Commission's DG Trade department, argued that boosting trade links creates jobs, estimating that “36 million jobs directly depend on trade.” She stressed that trade is becoming increasingly important to the EU and “in 2015, 90% of world growth will be outside of Europe, of which one third will be realised in China”.

Martin Thelle, the Director of Copenhagen Economics, argued that the implementation of Free Trade Agreements (FTAs) would result in a significant increase in exports. Pawel Zalewski MEP (EPP Group, Poland), Vice-Chairman of the European Parliament’s Committee on International Trade, argued in favour of keeping trade and development policy separate, “these are different instruments”.

UK Conservative MEP Syed Kamall argued said that the EU’s trade policy would ideally operate on a multilateral basis, but conceded that in the absence of such agreements, “we should put a heavy emphasis on bilaterals” instead. He stressed that the EU should oppose the “anti-business agenda” of trade deals which include environmental or development policies, as “we end up with everything but trade”.

Open Europe’s Pieter Cleppe is quoted on Polish financial newssite Inwestycje.pl which reported on the event as saying, “sometimes EU measures designed to protect the environment amount to protectionism through the back door.”
Open Europe Events Inwestycje.pl

At a conference in Riga yesterday, the UK’s Europe Minister David Lidington stated that: “we reject the idea that there ought to be some sort of artificial pause in the pursuit of EU enlargement following Croatia’s accession”.
Les Echos

The Telegraph reports that the UK Government has released its shortlist of candidates to replace Sir Nicholas Bratza, the UK’s current representative at the European Court of Human Rights in Strasbourg. Open Europe are quoted arguing in favour of greater democratic scrutiny of candidates by Parliament.

In an interview with La Repubblica, the leader of Italy’s main centre-left party, Pier Luigi Bersani, does not rule out a second mandate for Italian Prime Minister Mario Monti, noting, “What really matters is the creation of a political majority. The level of technical competence of governments is not the main issue.”
Repubblica: Bersani

EUobserver reports that Martin Schulz, the President of the European Parliament has argued that the only way for the institution to gain a higher profile and more influence is through confrontation with national governments.

On Conservative Home, Bernard Jenkin MP warns against combining the next election with a referendum on Europe.
Conservativehome: Jenkin Open Europe: Blog

The European Commission has selected food industry lobbyist, Mella Frewen, to join the management board of the European Food Safety Agency, potentially leading to a conflict of interest.

China has blocked its firms from buying planes made by European manufacturer Airbus in a row over the EU’s Emissions Trading Scheme, which imposes a levy on Chinese air carriers.
BBC WSJ EUobserver EurActiv

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