9 July 2015

Eurozone awaits final proposals to see if Grexit can be avoided

Greece will have to submit concrete proposals for a short- and long-term reform programme by midnight to follow up on the request for a three-year loan which it submitted yesterday to the ESM, the Eurozone’s bailout fund. In its request letter, Greece stressed its willingness to undertake pension and tax reform “as early as the beginning of next week”. Greek Energy Minister Panagiotis Lafazanis has said that Greece will not sign another Memorandum of Understanding linked to a bailout deal.

Latvian Central Bank Governor Ilmārs Rimšēvičs told Latvian TV, “It is one thing to put a plan on the table, but implementation is something else. Why should people believe that the new [Greek] proposal will be for real?”

Meanwhile, asked whether it will be possible to solve the Greek issue, ECB President Mario Draghi told Il Sole 24 Ore, “I don’t know. This time it’s really difficult.” He said of possible Russian aid to Greece, “That doesn’t seem a real risk to me. They [the Russians] don’t have money either.” Separately, it was confirmed yesterday that Greek banks would remain shut until Tuesday 14 July, while a €1,000 limit on cash which can be physically taken out of Greece was imposed.

US Treasury Secretary Jacob Lew stressed yesterday that Greece should “take the actions that it needs to take so that Europe will restructure the debt in a way that is more sustainable.” His comments were echoed by IMF Director Christine Lagarde, who reiterated the need for “debt restructuring” in Greece. Lew also said of a Grexit, “Geopolitically it would be a mistake”. French Prime Minister Manuel Valls told MPs yesterday that “France refuses Greece’s euro exit.” French opposition leader Nicolas Sarkozy said, “The most important thing to do – and I don’t understand why the President [François Hollande] doesn’t propose it – is to prepare a Plan B. What do we do if the worst comes and Greece exits [the euro]?”

Reports in Greece suggest that the Greek banks will run out of cash and liquidity in the next few days, although they may have enough to make it to Monday. Pharmacies are also reportedly running short of certain medicines. Open Europe’s calculation that Ireland’s exposure to Greece is €2.6bn is cited by the Irish Independent. Open Europe’s Twitter coverage of the Greek crisis is cited by The Independent and Die Welt’s live blog.

Writing on the website of the European Leadership Network, Open Europe’s Pieter Cleppe argues that “Grexit is the most likely outcome now”, because “Greece is already in default to the IMF, Greece and the rest of the Eurozone are further apart than ever, capital controls are notoriously hard to unwind and the ‘No’ vote [in the Greek referendum] protects Eurozone politicians from looking like they pushed Greece out.”

Source: European Leadership Network: Cleppe Kathimerini The Wall Street Journal The Financial Times Il Sole 24 Ore The Irish Independent Journal du Dimanche Le Figaro The Independent Die Welt Reuters

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German businesses appeal for UK to stay in the EU

German companies operating in Britain have written to the UK Prime Minister, Chancellor and Business Secretary urging them to make the case for Britain to remain in the EU. Bernd Atenstaedt, Chairman of German Industry UK, which represents companies including Basf, BMW, BOC, DHL, Npower, ThyssenKrupp and VW, said German business in the UK “strongly” agreed with David Cameron that there must be significant reductions in EU costs, bureaucracy and regulations. But he said that, after achieving the necessary reforms, “We would urge the Prime Minister to convince the British people of the financial, economic and social benefits of the EU for the UK and give a firm commitment to remain in the EU.”


OBR revises UK’s anticipated EU budget contributions up by £3.1bn over five years

In its latest economic and fiscal forecasts released alongside the Budget yesterday, the Office of Budget Responsibility estimates that the UK’s anticipated contribution to the EU budget over the next five years will be £3.1bn higher than it had foreseen in March. The change is mainly due to the UK having to make higher VAT and import tariff contributions after the size of its economy was reassessed relative to those of other member states’.

Open Europe’s Pawel Swidlicki is quoted in The Daily Telegraph and The Daily Mail arguing that this “will renew pressure on David Cameron to target the EU budget as part of his reform push. The mid-term review of the EU budget next year provides an opening to push reforms such as cutting spending on agriculture, eliminating the recycling of regional funds between richer states and refocusing the budget on areas where it can add value. This would benefit all European taxpayers but it will take time, and is therefore another reason not to rush the renegotiation.”


EU interior ministers set to finalise refugee redistribution scheme

EU interior ministers are today expected to finalise a plan for the relocation across the EU of 40,000 asylum seekers that have already arrived in Italy or Greece and the resettlement of 20,000 refugees currently based in camps outside the EU. The redistribution will be agreed on a voluntary basis, after EU countries rejected a European Commission plan for binding quotas. The Wall Street Journal reports that a handful of EU member states, such as the Czech Republic, have yet to specify how many refugees they are willing to take in. The UK, Denmark and Ireland have an opt-out from the scheme.


AfD co-founder Lucke announces he is leaving the party in wake of leadership defeat

Bernd Lucke, the former leader of the German anti-euro Alternative für Deutschland party, announced yesterday that he would be formally resigning from the party he helped to found following his defeat to Frauke Petry in the recent leadership contest, citing the party’s evolution into an “islamophobic and xenophobic” populist movement with anti-western and pro-Russian leanings. Lucke is reportedly considering whether to establish a new party together with most of the AfD’s MEPs and many other party members who have also recently left the party.


EU institutions “bounced” Ireland into bailout via leaks to media, former Taoiseach says

EU institutions sought to bounce Ireland into a bailout programme in late 2010 by providing selective leaks to international media, former Taoiseach Brian Cowen told a parliamentary inquiry into the country’s banking crisis. He said, “It became very clear to me, very quickly, that people were trying to bounce us into a programme in principle. I have no doubt that there were elements within the EU institutions that were providing inspired leaks to the media with that agenda in mind.”


European Parliament approves resolution on TTIP but proposes changes to ISDS

The European Parliament yesterday approved, by 436 votes to 241, a resolution backing a compromise on TTIP – the EU-US free trade agreement currently under negotiation. The approved text calls for the replacement of “the ISDS [Investor-State Dispute Settlement] system with a new system for resolving disputes between investors and states.” EU Trade Commissioner Cecilia Malmström said the European Parliament’s call for a new system “must be heard and it will be”, although the resolution is not binding and MEPs can only accept or reject the final trade agreement, not amend it.


Berlusconi found guilty of bribing a senator

Former Italian Prime Minister Silvio Berlusconi was yesterday sentenced to three years in prison after judges found him guilty of bribing a senator to defect to the opposition and bring down the centre-left government of Romano Prodi in 2008. However, Berlusconi is unlikely to face imprisonment since he can still appeal against the sentence and the statute of limitations in the case is due to lapse in November.


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