Daily Press Summary
Marathon negotiations on second Greek bailout end with agreement in principle; Leaked Troika report reveals Greece’s rescue programme “way off track”
Marathon negotiations on second Greek bailout end with agreement in principle;
Leaked Troika report reveals Greece’s rescue programme “way off track”
Following thirteen hours of talks, eurozone finance ministers reached an agreement in principle on the second Greek bailout. The plan sees the EU/IMF providing Greece with €130bn in funding, and forecasts that Greece’s debt to GDP ratio will fall to 120.5% in 2020. Private sector bondholders will be offered a larger than expected voluntary write down of 53.5% on their holdings. The lead negotiators for the private sector failed to fully endorse the deal, saying only that “all investors will carefully consider the proposed offer” and that the deal is “broadly consistent” with what had previously been agreed.
Under the plan the EU/IMF/ECB Troika will have a permanent presence on the ground in Greece, which will have to set up an escrow account containing enough cash to cover three months of debt repayments. The escrow account will be in place until Greece changes its constitution to make debt repayment the top priority in government spending. Both the ECB and national central banks will make a contribution, with the former offering to distribute profits on its holdings of Greek bonds to be used to aid Greece, while the latter will distribute all income from holdings of Greek bonds to the same end.
Finland and Greece signed their collateral deal yesterday. The agreement covers 40% of Finland’s share in the second Greek bailout, and establishes that Greece will transfer €1bn in bonds onto an escrow account. In the event of a Greek default, Finland would get its money back in 15 to 30 years, reports YLE.
However, the bailout is still not guaranteed since the Eurogroup issued Greece with a list of ‘prior actions’ that must be completed before the end of the month if the bailout and restructuring are to be finalised. The IMF said it would decide on its share of the bailout in the second week of March. Meanwhile, a leaked debt sustainability analysis provided to the Eurogroup gives a damning assessment of the latest plan, showing that the combination of massive austerity and being shut out of financial markets may make it impossible for Greek debt to ever become sustainable. The report also concludes that unless further debt reductions are found, another €50bn in bail-out funding is likely to be needed after 2014. Dutch Finance Minister Jan Kees de Jager said that given the remaining risks, the deal wasn’t “something to cheer about” and confirmed that further support may be necessary.
According to a new GPO poll published by MEGA TV, New Democracy and PASOK – the only two Greek parties to sign a written commitment to the austerity measures agreed with the Troika – would get a combined 32.5% of votes, an all-time low. The Greek Communist Party, Democratic Left and the Radical Left Coalition would obtain a combined 30%, while far-right LAOS party is on 5.1%.
Open Europe’s Raoul Ruparel appeared on BBC News this morning discussing the agreement and is quoted on the Telegraph live blog, arguing that “the prediction that Greek debt will become sustainable again rests on the assumption that Greece will hit impossible austerity targets and yet still return to growth next year.”
Eurogroup statement FT CityAM WSJ BBC Guardian Express Irish Independent Telegraph Mail Telegraph European Voice YLE Les Echos NOS TV Knack Welt Bild Süddeutsche FTD FTD 2 FAZ FAZ 2 EUobserver Eurogroup statement La Stampa La Stampa 2 Repubblica El País El Mundo WSJ 2 Les Echos 2 FT 2 FT Brussels blog Il Sole 24 Ore Mega TV Kathimerini Le Monde BBC IHT Les Echos WSJ Heard on the Street Guardian: Elliot Süddeutsche: Hulverscheidt Irish Times: Beesley WSJ 3 CityAM 2 WSJ 4 Telegraph: Live Blog
Twelve EU leaders set out priorities to boost jobs and growth in the EU
In a joint letter sent to European Commission President José Manuel Barroso and European Council President Herman Van Rompuy, David Cameron and the leaders of other eleven EU member states – including Italy, Spain and the Netherlands – set out eight priority areas to spur growth in the EU. The letter singles out the removal of obstacles to free competition in the services sector as the top priority. It also argues that: “We must take steps to build a robust, dynamic and competitive financial services sector that creates jobs and provides vital support to citizens and businesses”. It also argues in favour of reducing the burden of EU regulation, calling on the Commission to “publish an annual statement identifying and explaining the total net cost to business of regulatory proposals issued in the preceding year.” Neither Germany nor France signed the letter.
Meanwhile, ARD reports that a group of experts chaired by former Bavarian Prime Minister Edmund Stoiber has calculated that reducing EU bureaucracy could save companies up to €40bn, in a measure described as a “free stimulus”.
EU leaders' letter FT CityAM Telegraph Telegraph 2 European Voice Express Il Sole 24 Ore ARD
MPs demand extradition laws are reformed
The Mail reports that the House of Commons Home Affairs Select Committee will today highlight flaws with UK extradition agreements including the European Arrest Warrant. MPs will among others hear details of the case of Michael Turner, who spent four months in a Hungarian jail without trial, and to which he must return on charges relating to a failed 2005 business venture.
Open Europe Research Mail
David Cameron endorses Sarkozy’s re-election campaign;
French Socialist party split on ratification of ESM
In an interview with Le Figaro, Prime Minister David Cameron praised Nicolas Sarkozy’s leadership qualities and stated that “Sarkozy has my support, I say it clearly”. According to the most recent Ipsos poll, Sarkozy can count on 25% of first round voting intentions, and 41% at the second round, identical to his ratings fifteen days ago, before he had announced his candidacy.
Meanwhile, the French Socialist Party is split over the ratification of the eurozone’s permanent bail-out fund, the ESM, which is due to be voted on in the National Assembly today. Only states that have ratified the fiscal treaty will be able to benefit from the ESM funds, which is a source of tension for the Socialists, as leader Francois Hollande has pledged in his election manifesto that he would re-open the treaty to negotiate a growth clause.
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The WSJ reports that eight European banks have responded to new EU regulations and market conditions by increasing their deposits in central banks around the world by 50% to $816bn in a collective flight to safety.
The Guardian reports that the EU could face a trade war with Canada if it goes ahead this Thursday with plans to label fuel from Alberta’s tar sands reserves as "highly polluting”.
El País reports that 26 students were arrested yesterday in Valencia after demonstrations against the cuts to education, part of the Spanish government’s overall austerity package, turned violent.
Europe Minister David Lidington has said that an independent Scotland may have to introduce passport controls on its borders, as it would not necessarily inherit the UK’s opt-out from the Schengen Agreement.
Telegraph Scottish Sun Mail Express Scotsman Open Europe Blog