8 July 2015

Greece to request new bailout programme ahead of Sunday’s decisive meeting of EU leaders

Yesterday’s meetings of Eurozone finance ministers and Eurozone leaders ended with no agreement on Greece. Contrary to expectations, the Greek government presented no new proposals. Greece has this morning  sent a formal request for a new bailout programme via the ESM – the Eurozone’s permanent rescue fund – and has also agreed to submit by Thursday at the latest, a detailed list of reforms it plans to implement in return for financial assistance. Reports suggest Greece will seek a two- or three-year programme, and will likely also ask for some short-term bridge financing. The leaders of all 28 EU member states will meet on Sunday, in what is widely seen as the decisive summit. European Council President Donald Tusk told MEPs this morning, “The stark reality is that we only have four days left to find an ultimate agreement. I have to say loud and clear that the final deadline is this week. Our inability to reach an agreement would lead to the bankruptcy of Greece and the insolvency of its banking system.” European Commission President Jean-Claude Juncker told reporters yesterday, “The Commission is prepared for everything. We have a Grexit scenario, prepared in detail.”

German Chancellor Angela Merkel said last night, “This programme is, according to the now-withdrawn Greek request, meant to be two years long, so it is a multi-year programme. That such a multi-year programme has to entail more commitments is in itself clear.” She added that “a [debt] haircut is out of the question.” Dutch Prime Minister Mark Rutte said it was “extremely disappointing” that Greece had failed to submit new proposals to its counterparts. Lithuanian President Dalia Grybauskaitė said, “For the Greek government it’s mañana every time. For us, it can’t be mañana every day.” Belgian Prime Minister Charles Michel said, “I can’t look into his head, but I hope that [Greek Prime Minister Alexis] Tsipras has understood that the next few days are the moment of truth. It’s now or never.” Austrian Chancellor Werner Faymann and Italian Prime Minister Matteo Renzi both said that, following the Greek referendum, some Eurozone leaders have taken a more rigid stance vis-à-vis Greece. French President François Hollande said that “an agreement is still possible,” but the Greek government “has to present credible and serious proposals.” He added, “I know that the ECB will guarantee…minimum liquidity for Greece until Sunday.”

Speaking in the European Parliament this morning, Tsipras admitted that many of Greece’s problems “are home-grown,” but added that “the reforms attached to [previous] bailouts haven’t improved the functioning of the Greek state.” Meanwhile, asked when the ECB would decide to cut off liquidity for Greek banks via the Emergency Liquidity Assistance (ELA) facility, Banque de France Governor Christian Noyer told Europe 1 this morning, “From the moment when there’s no longer a prospect of political agreement on a programme…or from the moment when the Greek banking system collapses, which will happen if Greece defaults on all its debts.” Separately, according to a new Ifop poll for Le Figaro, 85% of French and 67% of Germans believe that the money lent to Greece so far will be lost – as it will never be able to repay its debts.

Source: The International New York Times Reuters France Le Figaro Rai News 24 Frankfurter Allgemeine Zeitung The Financial Times The Wall Street Journal Kathimerini Reuters Bloomberg

Polish Presidential advisor: Poland’s Eurozone accession will need to be approved via a referendum

In an interview with Reuters, Krzysztof Szczerski, the foreign affairs adviser to Polish President-elect Andrzej Duda, argues that the question of Poland’s Eurozone membership ought to be determined by a referendum, adding that “This realistically means that a discussion about introducing the euro in Poland during President Duda’s term is pointless.” Szczerski also described the concept of ever closer union within in the EU as “a conceptual trap,”, and that “now is the time for common sense to return to Europe.” Finally, Szczerski said that President Duda’s administration will be “more decisive” than its predecessors in blocking moves on carbon emissions seen as unfavourable for the Polish economy.

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Le Pen’s new European Parliament group to receive €3m a year in funding

The European Parliament has agreed to divert €3 million per year of funding from the various political groups to finance Marine Le Pen’s new far-right “Europe of Nations and Freedom” group, which includes her Front National party and Geert Wilder’s Party For Freedom. In May 2014 ahead of the European Parliament elections, Open Europe estimated that the group, and associated foundations  would be entitled up to €17m in funding over a five year term.

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French voters would sooner see Strauss-Kahn as President than Hollande

Dominique Strauss-Kahn, the former head of the IMF, is considered by French voters a potential Socialist Party candidate for France’s 2017 presidential elections according to a new opinion poll by Viavoice. When asked who’d make a “good candidate” for the left, Strauss Kahn finished second on 37%, coming after Prime Minister Manuel Valls (47%), but ahead of President François Hollande (23%). Overall, however, the forerunner in the race is still former President Nicolas Sarkozy.

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Commission warns against pressuring Irish banks to cut variable mortgage rates

The Irish Independent reports that a draft European Commission report seen by the paper warns that the “continued pressure” being placed by the Irish government on banks to cut mortgage interest rates may undermine the stability of Ireland’s financial sector. Despite acknowledging that variable rates in Ireland are “relatively high”, the report warns that intervention “may undermine financial sector stability by reducing profitability and impact on privatisation prospects.”

Irish Independent

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Schick: Tsipras must compromise even further to avoid Grexit

Open Europe’s Nina Schick appeared on BBC Five Live’s Wake up to Money discussing the latest developments in the Greece situation, and arguing that creditors would insist on more conditionality – not less – in order to agree to a third package for Greece. If Tsipras fails to come up with the acceptable proposals by the end of the week, Sunday’s emergency summit of EU leaders will be a Grexit summit, she argued.

Appearing on CNN, Open Europe’s Raoul Ruparel argued that Grexit now looks close to inevitable, but that it is possible for Greece to prosper outside the Eurozone if its government adopts the right policies. Writing on his Forbes blog, Raoul asks whether the ECB is right to take a tough line on Greece, and concludes that, ultimately, it can only buy time for a political decision. Meanwhile, Pieter Cleppe was interviewed by Polish Radio and Open Europe’s live twitter coverage of yesterday’s emergency Eurogroup and Eurozone leaders’ summit was cited by The Daily Telegraph and The Guardian live blogs, the BBC, Die Welt and Iefimerida.

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