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New Democracy and SYRIZA neck and neck in opinion polls; German government denies Merkel’s calls for Greek euro membership referendum

21 May 2012

New Democracy and SYRIZA neck and neck in opinion polls;
German government denies Merkel’s calls for Greek euro membership referendum
According to a Public Issue poll published by Greek daily Kathimerini, the left-wing SYRIZA party leads the polls on 28%, ahead of the June 17 elections. Centre-right New Democracy follows on 24%, and Socialist PASOK party comes third with 15% of votes. A separate MRB poll puts New Democracy in the lead with 24.4% of votes, followed by SYRIZA on 23.8% and PASOK on 14.5%, the WSJ reports. Meanwhile, the German government has denied that Chancellor Angela Merkel suggested that Greek President Karolos Papoulias hold a referendum on the country’s euro membership.

In an interview with Reuters, SYRIZA leader Alexis Tsipras said, “Yes, we do want Europe's support and funding, but we don’t want the money of European taxpayers to be wasted. Two bailouts in a row went into the dustbin, into a bottomless barrel. If this continues we would need a third package in six months. Europeans and their leaders must realise this…There is no way we could pay them off if we continued this programme.” Les Echos notes that Tsipras will travel to Paris and Berlin to meet left-wing party leaders.

Former European Commission President Romano Prodi said at a conference in Bologna that if Greece leaves the eurozone, “It’s mathematic that others will follow, it’s not a hypothesis.” Open Europe’s Mats Persson appeared on the Sky News' Murnaghan show discussing a potential Greek exit from the Eurozone.
WSJ Les Echos Irish Times Guardian Les Echos  Saturday’s Guardian: Tsipras Kathimerini Les Echos Telegraph WSJ 2 Kathimerini ASCA Les Echos Les Echos 2 Irish Times Les Echos La Tribune Irish Times Le Monde Les Echos Les Echos 2 Saturday’s Telegraph 2 BBC

Spain revises its deficit figure for 2011 upwards;
Hollande: European assistance may be needed to recapitalise Spanish banks
The Spanish government has revised its deficit figure for 2011, placing it at 8.9% of GDP from 8.51%, after finding that four Spanish regions had missed their deficit targets last year. The European Commission will send a team of experts to Spain this week to seek clarifications over the new increase, reports Expansión. Meanwhile, during a press conference in Washington, French President François Hollande said, “It would most probably be desirable to have a recapitalisation [of Spanish banks], and it would most probably be necessary that this recapitalisation takes place through mechanisms of European solidarity.” Hollande’s remarks have drawn rebuke from Spanish Prime Minister Mariano Rajoy, who said, “If he said that, it must be because Mr Hollande has information that we don't have. Therefore, I don’t think Mr Hollande said that because, logically, he doesn’t know how the Spanish banks are.” Hollande and Rajoy will meet in Paris on Wednesday.
Spanish Economy Ministry communiqué Le Monde Les Echos Les Echos 2 Les Echos 3 El País El Mundo Expansión 3 Cinco Días  Expansión 4  FT Weekend Independent Expansión Expansión 2 El País 2

Summit leaders divided over growth measures;
Monti and Hollande back mutualisation of eurozone debt
G8 leaders vowed to “promote growth and jobs” in their final statement following a two-day summit at Camp David. The communiqué noted that countries would not “take the same measures”, acknowledging that leaders remained divided over which strategies were appropriate. David Cameron rejected French President Francois Hollande’s proposal for an EU-wide financial transaction tax, which the Socialist leader had claimed would raise €57bn.

Italian Prime Minister Mario Monti advocated EU-wide project bonds as an “evolution towards eurobonds”, which would mutualise eurozone debt. Hollande stated that he would back eurobonds at the Council meeting on May 23. Corriere della Sera reports that Monti presented a plan, backed by the Bank of Italy and US president Barack Obama, which seeks to create a pan-European bank fund to guarantee customers’ bank deposits. He also announced a three-way summit with Merkel and Hollande in June.

Der Spiegel reports that Francois Hollande has expressed strong reservations about Wolfgang Schauble’s appointment to the position of head of the Eurogroup. The paper reports that Hollande would insist on Schauble’s resignation as German Finance Minister before taking on the new role.
Irish Times EurActiv Irish Times Le Monde Mirror Saturday’s Guardian Saturday’s Sun Saturday’s Mail  Les Echos Les Echos Il Sole 24 Ore RAI News 24 Saturday’s Guardian Saturday’s Sun Saturday’s Mail Der Spiegel

Cameron: Greek elections should be a referendum on eurozone membership
Clegg: Fiscal transfers within the eurozone are “unavoidable”
At the NATO summit in Chicago, Cameron said, "We now have to send a very clear message to [the Greek] people – There is a choice, you can either vote to stay in the euro with all the commitments you have made, or, if you vote another way, you are effectively voting to leave”.

In an interview with Der Spiegel, Deputy PM Nick Clegg strongly criticised the lack of leadership throughout the eurozone crisis, and reiterated Cameron’s call last week for the possible introduction of debt pooling via eurobonds, arguing that: “You cannot have a single currency without fiscal transfers… The eurozone cannot thrive through fiscal discipline alone”. In the Sunday Times, Chancellor George Osborne also calls for a discussion on eurobonds. In his Telegraph column, London Mayor Boris Johnson criticised the UK government’s stance on European fiscal union as “unbelievable”.

The idea of eurobonds continues to provoke strong resistance in Germany, as deputy finance minister Steffen Kampeter (CDU) told Deutschlandfunk radio this morning that eurobonds were “the wrong prescription at the wrong time, and would lead to the wrong side effects”. Kampeter added that “we in Germany do not think much of [debt-financed economic growth programs]”. Commenting on the UK government’s calls for eurobonds, Süddeutsche’s Nikolaus Piper argues that: “Two years ago, at the summit of the G-20 leaders in Toronto, Merkel was able to enforce the requirement that developed countries should cut their budget deficits by 2013. She was supported by the then newly elected British Prime Minister David Cameron. In the meantime, Cameron’s austerity policies led Britain into a recession, with a corresponding loss of credibility.”

Meanwhile, former Bundesbank board member and author Thilo Sarrazin will argue in his new book that German support for eurobonds was “driven by a very German reflex that penance for the Holocaust and the World War will only be completed when all our interests, including our money, have been laid in European hands”.
Sun Mirror Independent  Express Times Mail Telegraph Guardian City AM FT EUobserver Saturday’s Telegraph Saturday’s Guardian ITV News El País Spiegel: Clegg Interview Telegraph: Johnson Welt Süddeutsche FAZ Welt 2 Bild Süddeutsche 2 FAZ 2 Süddeutsche: Piper

Labour shadow ministers urge Ed Miliband to back an in/out EU referendum
The Observer reports that Ed Miliband is being pushed by “a growing number of shadow cabinet members and senior allies” to promise an in-out referendum on Britain's membership of the EU, if Labour wins the next general election. The Independent reports that Ed Balls as saying that "I don't think you should ever say that the public shouldn't be consulted as part of the discussion and in some ways part of Europe's problems is that it has been seen to be run too much by elites." The FT reports David Cameron as saying “I favour having a referendum if there is a proposal to transfer power to Brussels. That is a sensible position and why we have this ‘referendum lock.’” The Independent on Sunday reports on a ComRes opinion poll that finds that 61% of voters would vote to leave the EU and that 26% of Conservatives, 14% of Labour and 8% of Liberal Democrats are would “seriously consider” voting for UKIP.
Observer City AM Mail FT Independent Independent: Rentoul blog Independent on Sunday

Les Echos reports that France is the most exposed country to a Greek exit from the euro. French institutions currently own €65bn worth of Greek sovereign debt, and €37.6bn worth of private debt. France is the sixth largest exporter to Greece, and its biggest investor.  
Les Echos

Deutsche Bank warns Irish banks’ mortgage exposures could force country into second bailout
Saturday’s Telegraph reported that Deutsche Bank analysts have warned that the country’s rescued banks may need €4bn more to cover losses on loans than was assumed in stress tests last year. This could force the Irish government to seek a second bailout, the analysts warned. Meanwhile, the FT notes that, with just over a week to go until Ireland’s referendum on the fiscal treaty, polls show support for the treaty remains steady with 37% in favour, 24% against, and 35% undecided.
FT Saturday’s Telegraph Irish Times

In an article in the FT looking at financial regulation, Andreas Dombret, executive board member of the Bundesbank, and Paul Tucker, of the Bank of England, argue that “the international regulatory regime must cater for local circumstances. In the EU, national flexibility and regional differentiation are important. Economic differences between countries of the EU are substantial.”
FT: Dombret & Tucker FTfm

French authorities are racing to avoid a rescue of Caisse Centrale du Credit Immobilier (3CIF) after Moody’s downgraded the mortgage lender last week to junk, warning it could become totally reliant on taxpayer support within months.
Telegraph Times

Die Welt reports that German SMEs’ employment rate is at a record high, as 700,000 jobs will be created in 2011 and 2012. This may be hampered by rising energy prices.


Nationalist Tomislav Nikolic has been elected as Serbian President, beating socialist candidate Boris Tadic in Sunday’s elections. Mr Nikolic confirmed his commitment to pursuing EU membership for Serbia, saying the country “will not stray from its European path.”
EUobserver EurActiv BBC EurActiv Times Guardian

The European Commission is planning a proposal to introduce e-identities for EU citizens. Digital Agenda Commissioner, Neelie Kros, is set to present the new legislative proposal in June, which aims “to facilitate cross-border electronic transactions” through the use of e-signatures and e-identities.

Poland’s central bank chief, Marek Belka, has accused Western policymakers of forcing up global commodity prices, exacerbating inflation and contributing to damaging volatility on the foreign exchange markets.

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