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Greek euro exit could put pressure on David Cameron to veto EU Treaty change; Chris Grayling: Cameron should make more use of vetoes in EU talks

25 May 2012

The Times reports that the UK Government has said that the EU Treaties will have to be rewritten if Greece were to leave the euro. The paper quotes Open Europe’s Director Mats Persson as saying “a substantial treaty change would require the approval of all EU countries…this would again put the spotlight on David Cameron, who could end up squeezed between his own MPs, and may want significant concessions in return for approving the treaty, and other EU leaders, who will want a swift solution.” Conservative MP Nadhim Zahawi is quoted saying that Cameron should use a potential veto, “if you give up your main card why would they give you anything in return”, she said. However, the paper also quotes Nick Clegg as saying “any British Government of which I am a member, will not stand in the way.”

Separately Conservative Home reports that Employment Minister Chris Grayling MP has said that Cameron would benefit from more vetoes in EU talks “in the remainder of the parliament to ensure that he gets a lock on traditional Tory supporters.” He is reported as saying that Cameron should use his veto whenever an EU plan is devised which would ‘hit jobs’.
Times ConservativeHome Independent Telegraph Spectator

Quickening economic contraction increases pressure on eurozone leaders;
Monti optimistic he can change Germany’s mind on eurobonds
Economic data released yesterday shows that eurozone economic activity contracted at the fastest rate in May since June 2009, including in France and Germany. In a speech in Rome, ECB President Mario Draghi said, “We have now reached a point where the process of European integration needs a brave leap of political imagination,” increasing the pressure on EU leaders following a disappointing summit this week. In an interview with Italian television station La7 yesterday, Italian Prime Minister Mario Monti said that a majority of EU leaders at the summit backed eurobonds, adding that he believed Italy can help persuade Germany to support them for Europe’s “common good”.

However, German Chancellor Angela Merkel reiterated her opposition to eurobonds yesterday, arguing that the main problem in the eurozone was the difference in competitiveness across member states, and that it “makes no sense to patch this up with eurobonds or similar supportive instruments only to subsequently encounter an even more difficult situation”. In a comment piece, Die Welt’s Brussels correspondent Florian Eder argues that French President Francois Hollande’s on-going push for eurobonds shows that he “has not given up his dream of life in a hammock made from German taxpayers’ money”.
FT WSJ WSJ 2  Le Figaro Le Figaro 2 Le Monde Les Echos La Tribune Les Echos 2 Le Figaro FT 2 Le Figaro 2 IHT IHT 2 Le Monde Le Monde 2 Les Echos 3 Bloomberg FT 3 Irish Independent Le Figaro 3 Les Echos 4 Telegraph Economist 2 Le Monde 3 Les Echos 5 Les Echos 6 Telegraph: Warner FAZ DMN Handelsblatt Welt Welt: Eder FTD: Leader FT: Stephens Economist: Charlemagne

David Cameron criticised by ECB President for pushing “monetary activism”
The FT reports that Mario Draghi, President of the European Central Bank, has reproached David Cameron for arguing for greater ECB intervention, due to fears that the Prime Minister’s intervention has added to financial market nervousness, and would compromise ECB independence.

Separately the Independent reports that Deputy Prime Minister Nick Clegg was forced to temper his support for eurobonds during a visit to Germany. Angela Merkel reportedly told him she had blocked French President François Hollande's eurobond plans "I think I was quite successful in that”, she said.
FT FT 2 Independent Telegraph: Persson Open Europe Blog Open Europe blog 2

The Dutch Parliament yesterday ratified the ESM treaty establishing the eurozone’s permanent bailout fund by a margin of two to one. This is despite PVV leader Geert Wilders campaigning for the vote to be delayed until after the September elections.
FT Les Echos

Polls put Syriza as largest party despite 70% of Greeks wanting to stay in the euro
The latest Public Issue poll released yesterday put Syriza as the largest party with 30% of the vote, New Democracy on 26% and Pasok on 15%. The figures suggest a surge in support for Syriza but also a move back towards the larger parties, with smaller parties falling in the polls. A poll from Ipsos suggests that 70% of Greeks would vote to keep the euro if a referendum on the issue were held today, this compares to 50% of Italians, 62% of French, 51% of Germans and 55% of Spaniards.

Die Welt reports that uncertainty over Greece’s future in the eurozone is leading to widespread tax evasion. Greek tax revenues between January and April were €500m lower than anticipated in the 2012 budget, while April’s takings fell by 13% on the previous year.
Kathimerini Economist Les Echos Les Echos 2 Les Echos 3 Les Echos 4 Le Monde 5 Les Echos 6 Welt Bild Süddeutsche FAZ

Merkel’s cross party talks on ratifying fiscal treaty do not yield a breakthrough;
Schäuble: Decoupling fiscal treaty from ESM “inconceivable”
Der Spiegel reports that there was no breakthrough in talks, chaired by German Chancellor Angela Merkel between senior coalition and opposition figures, on the ratification of the fiscal treaty. Süddeutsche reports that the SPD is split over whether to supporting the fiscal treaty.

 Finance Minister Wolfgang Schäuble told Reuters that the decoupling of fiscal treaty and the ESM treaty establishing the eurozone’s bailout fund, was “inconceivable”.

Der Spiegel reports that the German government has already put forward a six-point plan for boosting growth in Europe, including the establishment of ‘Special Economic Zones’ with special tax advantages in the countries most affected by the eurozone crisis, as well as German-style privatisation and labour market reforms.

Separately, Gerd Landsberg, the Chief Executive of the German Association of Towns and Municipalities, has criticised the debt brake contained within the treaty as “unrealistic” as local authorities would struggle to provide basic social services were it to be implemented.
Süddeutsche Welt Welt 2 Welt 3 Welt 4 FAZ Reuters Spiegel Spiegel 2 Handelsblatt Handelsblatt 2 Irish Independent Irish Times Irish Times 2 Irish Times 3

The Commission says it may ignore national parliaments in first ever “yellow card” case
Europaportalen reports that twelve national parliaments have objected to a European Commission proposal, “Monti I”, aimed at clarifying the relationship between free movement of workers and the right to strike. This is the first time that nine or more national parliaments have objected to a Commission proposal on sunsidiarity grounds, under the “yellow card” provisions in the in the Lisbon Treaty that require the Commission to re-consider, but not automatically scrap, a proposal if one third of parliaments have reservations. However, the Commission has said that it may go ahead with the proposal anyway.

Conservative MEP Martin Callanan, leader of the European Conservatives and Reformists Group, has ruled out an electoral pact with UKIP, although fellow Conservative MEP Dan Hannan writes that “This isn't as unthinkable as some commentators believe.”
BBC Telegraph: Hannan

In a report released yesterday, the Irish Comptroller and Auditor General warned that Irish bank NAMA will face “considerable challenges” recouping the €32bn it spent purchasing toxic assets from Irish banks, suggesting that NAMA overpaid by around 20% on the assets it has bought so far.
Irish Independent

Spanish lender Bankia will reportedly ask the government for more than €15bn to bail it out when its new management team presents a restructuring plan today. Shares in the bank have been suspended “due to circumstances that may affect the normal share trading,” the Spanish stock market regulator CMV said this morning.
City AM BBC Telegraph Guardian Economist Le Monde Telegraph

In this week’s leader, the Economist presents its plan for the eurozone, which “fills in two holes in the single currency’s original design. The first is financial: the eurozone needs a region-wide system of bank supervision, recapitalisation, deposit insurance and regulation. The second is fiscal: eurozone governments will be able to manage their fiscal burdens only with a limited mutualisation of debt.” The leader adds, “the answer is not to transfer everything to the EU level”.
Economist leader

Writing in the Telegraph senior MPs David Davis and Jack Straw argue that “Britain cannot be forced to give prisoners the vote or to pay compensation to prisoners who sue the Government over this issue. The Court does not have the power to fine Britain for non-compliance.”

Indian civil aviation minister Ajit Singh has issued a threat to ban European airlines from India’s airspace if an EU carbon tax on planes is introduced. He warned, “travelling is always a two-way traffic. If they can impose sanctions, so can other countries”.

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