Daily Press Summary
Fears of a Greek exit from the euro intensify and new elections are increasingly likely; Belgian and Irish Central Bank Governors suggest a Greek exit would be manageable
The Greek crisis looks set to dominate today’s meeting of eurozone finance ministers, as last ditch talks to form a coalition government appear to have failed yesterday. This morning Syriza, the second largest party in the elections, called for the Greek President Karolos Papoulias to host another round of talks with all the parties except far-right Golden Dawn. The party had previously said would not attend any more discussions. The incentive for Syriza to form a coalition government was reduced after two polls last week suggested it would gain the most votes in a new election. However, a poll by Kappa Research for To Vima showed that 78.1% of Greeks still want the new government to do whatever it takes to keep their country in the eurozone.
Luc Coene, Governor of the Central Bank of Belgium, said in an interview with the FT that, “I guess an amicable divorce [between Greece and the eurozone] would be possible, but I would still regret it.” Patrick Honohan, Irish Central Bank Governor, told a conference in Estonia at the weekend, “Things can happen that are not imagined in the treaties…Technically, [a Greek exit] can be managed…It is not necessarily fatal, but it is not attractive.” Coene also warned that the ECB would be forced to cut off all forms of liquidity assistance to Greek banks if their recapitalisation through the bailout programmes was halted.
Business Secretary Vince Cable warned that a Greek exit would have a “massive impact” on Britain, and that the UK must hope that the eurozone firewalls are strong enough to stop contagion reaching Spain and Italy. Der Spiegel reported over the weekend that, according to a leaked document from the German Finance Ministry, even if Greece leaves the euro, it will still require financial support and as an EU member, this could be provided by all EU member states. However, today’s front-page of the magazine still calls for Greece to leave the euro. The FT today launches a five part series looking at the impact of a Greek exit from the eurozone.
FT FT Interview: Coene CityAM Sunday Times FT 2 FT 3 WSJ Guardian Times Telegraph Le Monde Les Echos Les Echos 2 IHT Le Figaro Kathimerini Kathimerini 2 Il Sole 24 Ore Saturday’s Independent Saturday’s Times Saturday’s Guardian Irish Times FT Weekend Le Figaro 2 EUobserver Kathimerini 3 Telegraph 2 Spiegel Guardian 2 Observer Observer: Pryce Observer: Elliott FT Analysis FT: Munchau CityAM: Heath WSJ: Nixon Emmott: Times Guardian Editorial Times Editorial
Merkel’s party suffers major defeat in key regional elections;
FT Deutschland: Fiscal treaty ratification could turn into “power challenge with strengthened SPD”
German Chancellor Angela Merkel’s CDU party suffered a major defeat in yesterday’s elections in North Rhine-Westphalia, Germany’s most populous Land. Opposition SPD party won 39.1% of votes, while Merkel’s party received just 26.3% – its worst performance in North Rhine-Westphalia since World War II. Regional SPD leader Hannelore Kraft is now expected to form a coalition with the Green Party, which obtained 11.3% of votes. Meanwhile, the anti-bailout Pirate Party obtained 7.8% of votes.
Following the election results, FT Deutschland argues that “for Merkel it will now become harder”, suggesting that “the vote on the fiscal treaty could become a power challenge” with a strengthened SPD. German commentators argue that the defeat could mark the end of promising CDU politician and German Environment Minister Norbert Röttgen’s career, as Bild notes that “the ambitious Norbert Röttgen will never be Chancellor.”
Süddeutsche Zeitung: Prantl Bild: Blome Welt Guardian Spiegel FTD Leader FT CityAM WSJ Guardian Times Les Echos Les Echos 2 Independent EUobserver Il Sole 24 Ore Irish Times WSJ Review & Outlook
Belgian daily De Morgen quotes Open Europe's Pieter Cleppe estimating the exposure of Belgian taxpayers to a Greek euro exit and default at €7.1bn, as a result of Belgium’s bilateral, EFSF, ECB and IMF commitments. The figure was also cited by Belgian Radio 1.
Spanish banks requested to set aside an extra €30bn to cover for potential losses from real estate loans
Spanish banks have been asked to raise an additional €30bn in capital provisions to cover potential losses from real estate loans by the end of the year. The Spanish government has also unveiled plans to force banks to transfer doubtful real estate assets into separate ‘investment societies’ tasked with selling them on the markets. Two independent audits of the entire real estate portfolio held by Spanish banks will also be carried out.
Meanwhile, El País reports that the European Commission will decide whether Spain needs to adopt new austerity measures to meet its deficit targets for 2012 and 2013 by the end of May. El Mundo notes that Spain’s borrowing costs reached their highest 2012 levels this morning, amid growing fears of a Greek eurozone exit. Separately, tens of thousands of Spaniards took to the streets yesterday to mark the first anniversary of the ‘indignados’ movement.
FT CityAM WSJ El Mundo El País FT Weekend Saturday’s Times Saturday’s Telegraph Saturday’s Guardian El Mundo 2 El País 2 Expansión RTVE Irish Times
Merkel: no negotiation with Hollande over fiscal treaty
Ahead of her first meeting with French President-elect Francois Hollande tomorrow, Angela Merkel expressed her confidence in a “good Franco-German relationship” on Saturday. She stressed that no policy decisions would be made at the meeting, but that the two leaders would “get to know each other”, adding, “I think it will mark the start of a good cooperation”.
In an interview with German daily Süddeutsche Zeitung, Jens Weidmann, Bundesbank President, dismissed Hollande’s attempts to renegotiate the fiscal treaty, “it’s clear that we have to refuse his campaign pledge to unravel the budgetary compact, it’s a European custom to stick to signed agreements”. He added, “past experience shows that too great a debt is an obstacle to growth. Trading off debt with more debt will not work”.
Times Le Monde Les Echos Reuters Le Monde 2 Suddeutsche
The FT reports that Britain will drop some of its objections to the EU’s proposals for banking capital requirements at a meeting of EU finance ministers tomorrow. Under the final agreement, Britain will be able to implement Basel III, and the Vickers banking reforms. Disagreements over bankers’ pay persist between member states.
FT Sunday Telegraph Sunday Telegraph: Quinn City AM
William Hague: an in/out EU referendum is the “wrong question at the wrong time”
In an interview with the Sunday Telegraph William Hague says that a referendum on the UK’s membership of the EU would be the “wrong question at the wrong time - partly because we don’t know how Europe will develop over the next few years.”
In the Sun on Sunday, Europe Minister David Lidington argues, “It isn’t for Britain to tell Greece or any other eurozone country what the future of the euro will be…But if the ultimate decisions on the Eurozone aren’t for us, so we shouldn’t have to bail out the euro either.”
In the Mail on Sunday, former chancellor Alistair Darling argues that “The eurozone has to accept the consequences of a single currency. It means increasing economic and political union. It also means the richer parts helping the poorer areas.”
Sunday Telegraph Conservative Home Conservative Home: Howarth Mail on Sunday: Darling Times Mail Sun
Irish Government to argue for EU growth measures ahead of referendum on fiscal pact
Irish Taoiseach Enda Kenny has called for a change to the role of the European Investment Bank, the introduction of euro bonds and the creation of adequate firewalls. An opinion poll for Businesspost reports that the yes vote in Ireland’s referendum on the ‘fiscal pact’ leads the no 63% to 37%, once undecided voters are eliminated.
Irish Independent Irish Independent 2 Irish Times Irish Times 2 WSJ Irish Independent 3 Irish Times 3 Businesspost
Following a series of assaults against the offices of Equitalia, Italy’s tax collection agency, Interior Minister Anna Maria Cancellieri told La Repubblica that the government is considering sending the army to protect the agency’s employees, as she noted that “an attack on Equitalia is equivalent to an attack on the [Italian] state.”
Repubblica: Cancellieri Telegraph
Data published by the Commission, NGOs and the UN reveals that Israeli authorities have destroyed aid projects for Palestinians and the West Bank worth €49m in the last decade. EU Foreign Ministers will meet in Brussels to discuss the issue today. EUobserver reports that Italy and the Netherlands will block attempts to impose penalties on the Israeli government.