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Calls for Eurobonds intensify ahead of EU summit; Opinion on Eurobonds split in Germany and Austria

23 May 2012

Ahead of today’s meeting of EU leaders in Brussels the clamour for a move towards so-called ‘Eurobonds’ intensified, as France, the OECD and the IMF voiced support for some form of debt-pooling at the eurozone level. However, the OECD’s demands focused on using jointly issued bonds to recapitalise European banks, while the IMF Director Christine Lagarde spoke only of “fiscal liability sharing”. Such demands have previously been dismissed by Germany, with both Chancellor Merkel and Finance Minister Wolfgang Schäuble reiterating their opposition.

However, Germany’s EU Energy Commissioner Günther Oettinger, a member of Merkel’s CDU party, told Handelsblatt, “Eurobonds are a matter of timing. I advise all participants not to position themselves inherently against them.” The FDP’s parliamentary leader Rainer Brüderle told German radio Deutschlandfunk that if structural reforms and budgetary discipline were implemented, the introduction of Eurobonds “at a later date” could be conceivable.

Meanwhile, in an interview with Kleine Zeitung, Austria’s Social Democratic Chancellor Werner Faymann said he “fully supports” French President François Hollande in wanting to discuss Eurobonds at today’s summit, despite the fact that yesterday Austrian Finance Minister Maria Fekter, from the centre-right People’s Party, described Hollande’s arguments on growth as “nonsense”.

EU leaders are also expected to discuss plans for a ‘growth pact’ as well as proposals for shoring up the European banking sector, including a European-wide resolution and deposit guarantee scheme as well as potentially allowing the ESM, the eurozone’s permanent bailout fund, to lend directly to banks. Open Europe’s Raoul Ruparel appeared on BBC News this morning and Vincenzo Scarpetta appeared on RTE’s Drivetime programme yesterday, both discussing the summit and the proposal for Eurobonds.
RTE: Drivetime FT CityAM IHT Le Figaro WSJ EUobserver El País Independent Independent 2 FT 3 WSJ 2 Le Figaro 2 FT 2 European Voice La Stampa blogs: Zatterin Irish Times Guardian Focus Süddeutsche Handelsblatt Kleine Zeitung Welt Welt: Alexander FTD: Leader El Mundo Cinco Días Le Monde Le Monde 2 Les Echos Les Echos 2 Les Echos 3 WSJ 3 Telegraph EUobserver 2 El País Expansión Cinco Días FT: Wolf FT: Kay FT: Siegel CityAM: Whyte Le Figaro: Editorial Le Figaro: de Silguy Independent: Leader BBC: Hewitt Guardian: Milne

SPD: Schäuble “deceiving” German states over fiscal treaty
Handelsblatt reports that ahead of tomorrow’s discussions between the government and opposition parties on ratifying the fiscal treaty, a number of SPD politicians, in particular at the regional level, have accused Finance Minister Wolfgang Schäuble of “deception and obfuscation” for refusing to release a European Commission paper discussing the impact of the fiscal treaty on German states’ finances and the legal grounding of the balanced budget rule set out in the treaty.

SYRIZA leader: A vote for the left doesn’t mean that we would leave the euro;
Four largest Greek banks in line for €18bn recapitalisation
Speaking in Berlin yesterday, the leader of left-wing SYRIZA party, Alexis Tsipras, said, “A vote for the left does not mean that we would leave the euro. Quite the opposite, we would keep the euro.” However, he added, “The destruction of the eurozone is not a natural phenomenon but a result of political choice. We must not be led to catastrophe as a result of stubbornness or some kind of mistake.”

In an interview with the WSJ, former Greek Prime Minister Lucas Papademos said, “Although such a scenario is unlikely to materialise and it is not desirable either for Greece or for other countries, it cannot be excluded that preparations are being made to contain the potential consequences of a Greek euro exit.”

Speaking to Bild, Alexander Dobrindt – the Secretary General of CSU, the Bavarian sister party of Chancellor Merkel’s CDU – argued, “If the communists and other radicals win the elections, a Greek exit from the euro will be inevitable”, adding that other European countries should unilaterally cancel the payment of loans to Greece. Meanwhile, City AM reports that Greece’s four largest commercial banks will receive €18bn recapitalisation funds by the end of the week. 
WSJ: Papademos Kathimerini Kathimerini 2 Kathimerini 3 IHT CityAM Irish Times Guardian FT BBC: Today BBC WSJ

The European Court of Human Rights has given the UK six months to change its electoral law and scrap the blanket ban on serving prisoners voting.
Open Europe research Independent EUobserver Mail Times Telegraph Telegraph: Editorial

In an op-ed in the Times, German Foreign Minister Guido Westerwelle argues, “Anyone who wants new flash-in-the-pan stimulus packages financed by yet more borrowing has learnt absolutely nothing from the crisis.” He sets out six ways to spur growth in Europe – including a better use of the 2014-2020 EU budget.
Times: Westerwelle

Dutch far-right leader Geert Wilders yesterday filed a lawsuit demanding that the Dutch parliament wait until after the next general election – scheduled for 12 September – to ratify the treaty establishing the eurozone’s permanent bailout fund, the ESM. An opinion poll from Dutch TV programme EenVaandag showed that 59% of respondents shared Wilders’ view.
EenVaandag EUobserver FT CityAM

According to an IFOP-Fiducial poll on the upcoming French legislative elections, French President François Hollande’s Socialist party leads on 34.5%, ahead of Nicolas Sarkozy’s UMP on 33%. Far-right Front National is in third place with 16%.
Le Monde Les Echos

The ECJ ruled yesterday that Germany may expel citizens of other EU member states if they have been convicted of serious criminal offences even if they lived in the country for over ten years and acquired a permanent right of residence, if they “represent a real and present danger” to others, reports Der Spiegel.
Spiegel Open Europe research

The European Parliament yesterday gave the green light to a €230m pilot scheme of EU ‘project bonds’ to support investment in transport, energy and information technology, EUobserver reports.  
EUobserver EurActiv EC statement

The Italian government has adopted plans to unblock between €20bn and €30bn by the end of the year to make overdue payments to private firms that have supplied goods or services to the public administrations, reports La Stampa.
La Stampa Il Sole 24 Ore

The Mail reports that electricity bills could rise by up to £200 a year for each home under Government plans to guarantee high prices for firms building nuclear power stations and wind farms. The moves are designed to ensure the Government meets its promise to cut CO2 emissions to meet EU targets.

Thousands of Spanish teachers took to the streets across the country yesterday, in protest against the government’s planned cuts to education, Europa Press reports.
Europa Press IHT

EU member states and MEPs have failed to reach an agreement on secrecy rules governing internal EU documents. The Danish EU Presidency still hopes to conclude the discussions by 26 June, reports EUobserver.

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