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In an opinion released this morning, the ECJ’s Advocate General has said that the ECB’s bond-buying scheme – the Outright Monetary Transactions (OMT) Programme – is “compatible in principle” with EU law, but laid out some conditions for its implementation. The Advocate General argued that, if the OMT is activated, the ECB must “refrain from any direct involvement in the financial assistance programme that applies to the [Eurozone] state concerned” – meaning that the ECB would have to pull out of the Troika in specific cases. The Advocate General also stressed that the use of the OMT needs to be proportional and must allow for the formation of market prices for the government bonds concerned, and warned that national courts “must exercise a considerable degree of caution when reviewing the ECB’s activity, since they lack the expertise and experience which the ECB has in this area [monetary policy]” – potentially a veiled message to the German Constitutional Court, which referred the case to the ECJ.
Meanwhile, ECB President Mario Draghi told Die Zeit that the ECB is ready to buy government bonds, adding, “There are, of course, differences [within the ECB] over how that should be done, but there aren’t endless possibilities.”
Open Europe Responds: ECJ opinion validates ECB bond buying but puts German Court in tough position European Court of Justice Press Release, Die Zeit
Italian President Giorgio Napolitano has resigned this morning. The Italian parliament will be convened within the next two weeks to elect his successor. ECB President Mario Draghi, often cited by the Italian media as a possible contender, told German weekly Die Zeit, “It’s a great honour [to be considered], but it’s not my job.”
Open Europe Blog: Electing the new Italian President: No Greek drama, but a test for Renzi
The European Commission yesterday published new guidelines on the enforcement of EU fiscal rules, which are expected to grant more flexibility to countries such as Italy and France. The Commission said that, provided certain conditions are met, Eurozone countries facing an economic slowdown could be allowed to cut their structural deficit at a slower pace. The Commission will also take into account the cost of implementing structural reforms when assessing whether Eurozone countries are breaching EU fiscal rules, while national investment in projects co-financed by the EU will be excluded from deficit calculations.
EU Trade Commissioner Cecilia Malmstöm has said that the outcome of the public consultation on the proposed EU-US free trade deal has revealed “huge scepticism,” particularly with regard to the investor protection clause of the deal. Malmström said yesterday she was still not ready to recommend how to modify the investor guarantee or say whether it should be jettisoned, instead noting there were “areas that can be reformed.”
Frankfurter Allgemeine Zeitung,
Kathimerini reports that Greece’s left-wing SYRIZA has ruled out forming a coalition with KDS, the new political party founded by former Prime Minister George Papandreou. The offer for cooperation made by Papandreou has been “dumped in the trash,” a spokesman for SYRIZA said.
Portugal’s first auction of 30-year bonds since its EU/IMF bail-out took place yesterday and drew strong investor demand, the Wall Street Journal reports. Portugal managed to sell €2bn of 30-year bonds at an interest rate of 4.1%.
The Wall Street Journal
Irish Finance Minister Michael Noonan said yesterday that he would not dismiss the idea of a European conference to discuss a possible debt write-down for crisis-hit Eurozone countries such as Greece, Ireland and Spain.
Catalonia will this year request nearly €6.3bn from the Spanish government’s liquidity fund for regions (FLA), according to documents seen by Spanish business daily Expansión.
A new YouGov poll for the Sun has Labour in the lead on 33% ahead of the Conservatives on 32%, UKIP on 14%, and the Liberal Democrats and Greens tied on 7% each.
Farmers in England could be free to plant genetically modified crops after the European Parliament voted to allow member states to choose whether to permit cultivation on their own territory.
Open Europe Blog: New rules on GMOs: a step towards a more flexible EU?,
Europol head Rob Wainwright yesterday told the Commons Home Affairs Committee that between 3,000 and 5,000 EU nationals have left Europe to fight in Syria, Iraq and other conflict zones who “have the potential to come back, and have the intent, if not the capability, to carry out attacks that we have seen in Paris last week.”
In comments seen as a sign that Denmark may bring forward its referendum on removing its EU Justice and Home Affairs opt-out, Danish Prime Minister Helle Thorning-Schmidt is reported by Politiken as saying, “We need to make sure that we have closer cooperation and exchange information among the secret services in Europe.”
Expressen reports that acting leader of the anti-immigrant Sweden Democrat party, Mattias Karlsson, will seek a no-confidence motion against Swedish Prime Minister Stefan Löfven, which will be submitted alongside today’s party leader debate in parliament. However, the motion is unlikely to garner support from the centre-right opposition.