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Greek party leaders to discuss proposal for technocratic government; Juncker: “We wouldn’t preclude a debate” on giving Greece more time to meet targets

15 May 2012

Negotiations over the formation of a national unity government between Greek President Karolos Papoulias and the leaders of New Democracy, PASOK and Democratic Left ended without a breakthrough, as the leader of left-wing SYRIZA, Alexis Tsipras, refused to join the meeting. Talks will resume this afternoon, when the leaders of all the political parties that won seats in the election – with the only exception of the Neo-Nazis Golden Dawn party – will discuss Papoulias’ proposal for a government of technocrats. The chances for success continue to look quite small. PASOK leader Evangelos Venizelos said yesterday that his party would support a government of technocrats only if all other parties did so. Democratic Left leader Fotis Kouvelis described a technocratic government as “a defeat for politics”.

Meanwhile, speaking to the press after yesterday’s meeting of eurozone finance ministers, Eurogroup Chairman Jean-Claude Juncker hinted at the possibility of giving Greece more time to meet its deficit targets, as he said, “If there were exceptional circumstances, we wouldn’t preclude a debate about an extension of the period. But the proper order is needed – first to have a government, then exceptional circumstances.” However, Dutch Finance Minister Jan Kees de Jager said, “I can’t see a way that Greece could be given more time [to meet its targets]. It still has to stick to these painful reforms.” Separately, a government official told Reuters that Greece will today pay the €430m of bonds held by private investors that refused to take part in the debt swap in March.

In an interview with Europe 1 this morning, outgoing French Economy Minister François Baroin said that Greece’s eurozone exit “would have a net cost of €50bn” for France, “plus the debt held by banks and insurance firms in their portfolios”. Baroin warned of the “exceptional [risk of] contagion if a eurozone country were to leave.”

On his Telegraph blog, Open Europe’s Director Mats Persson argues, “There’s a paradox at the heart of the Greek euro debate: voters have comprehensively rejected EU-mandated austerity – parties that are (more or less) in favour of ripping up the bailout conditions mustered 68% of the votes. And yet, according to a new poll, 78% of Greeks are still in favour of the new government doing ‘whatever it takes’ for the country to stay inside the Eurozone,” suggesting that Greece’s anti-bailout parties may eventually cave in.  

Open Europe’s Vincenzo Scarpetta appeared on BBC News discussing the political situation in Greece and the possible consequences of Greece’s eurozone exit. Raoul Ruparel is quoted by the Telegraph and Pieter Cleppe is quoted by the Los Angeles Times.

Telegraph blogs: Persson Standaard CNBC WSJ FT 2 IHT Kathimerini Kathimerini 2 FT EUobserver 3 Kathimerini 2 EUobserver EUobserver 2 LA Times Telegraph BBC Irish Times BBC EurActiv Irish Times Mail European Voice Telegraph Times Guardian Guardian Independent Telegraph Independent Irish Independent Express Guardian Telegraph blogs: Lilico Le Figaro

Hollande to meet Merkel this evening, after being invested as French President;
Le Monde: Regional election defeat may soften Merkel
François Hollande was invested as French President this morning. He is expected to announce the new Prime Minister this afternoon. Jean-Marc Ayrault, who is considered as a ‘Germanophile’, is tipped to be appointed. Hollande will then leave for Berlin, where he will meet German Chancellor Angela Merkel for the first time. Le Monde argues that Merkel’s poor results in last weekend’s regional elections – widely presented as a referendum on austerity policies – may force her to be more accommodating towards Hollande.

WSJ: Heard on the Street FT: Leader FT IHT Irish Independent Le Figaro Le Figaro 2 Le Monde Le Monde 2 Les Echos Le Figaro 3 Le Monde 3 Les Echos 2 BBC Irish Times Irish Times 2 Telegraph Handelsblatt Handelsblatt 2 Globe and Mail

Finance ministers expected to reach deal on new capital requirements rules
At their meeting today, EU finance ministers will try to break the deadlock on new EU bank capital rules. Under a possible compromise, Britain, which has been calling for the right to impose tougher regulation, would be able to raise a bank's minimum capital from the 7% core tier 1 capital ratio – set by the so-called Basel III code – to 12%. Above this, it would need approval from the European Commission, Reuters reports. If there is agreement, ministers will begin negotiations with MEPs, which approved their version of the rules yesterday.
Reuters WSJ European Voice EP press release Telegraph EUobserver

Balls suggests Labour would support EU referendum in the future
The Guardian reports that Ed Balls, the Shadow Chancellor, has suggested that there was a future case for holding a referendum on UK membership of the EU. Although he said the time for a referendum was not now. On the possibility of Labour backing a referendum, Balls said, “This is some years away. That might be an issue whose time comes, but I don't think that that is now. I don't think that is either the right priority for Britain in its relations with Europe, nor do I think it would be sensible politics when we have big arguments to win on reform.”
Guardian FT Express

Portugal’s central bank has warned that even successfully implementing the EU-IMF bailout programme is no guarantee the country will be able to return to the markets in 2013.

Ahead of new Dutch elections, in the two weeks since government and opposition parties reached a deal on a new budget, polls have gone from a 51-28% margin in favour of the compromise to a near-even 39-38%, according to pollster Maurice de Hond.

Belgium's planning office, which provides official economic and borrowing forecasts, said yesterday that the country's government would have to find another 11 billion euro by 2015. Open Europe’s estimate that Belgium’s exposure to the eurozone bailouts,via its IMF contributions, stands at up to €670m is cited by Belgian daily De Tijd.
De Morgen WSJ

Patients are being put at risk by shortages of medicines because the Government puts EU law ahead of safety, according to a report to be published by MPs today, the Times reports. They call for Britain to seek an exemption from EU trade laws on the ground of the risk to public health, and impose strict limits on the export of medicines, following a similar move by France.

Stern reports that the German SPD leadership will today present their conditions to Angela Merkel for supporting the EU's fiscal pact. Reported demands include a financial transaction tax, as well as stronger penalties for banks.

EU finance ministers are today set to endorse a European Commission report on the impact of an ageing population on public finances, which urges for further budget cuts and longer working periods.

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