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Eurozone finance ministers on Friday approved a new €86bn bailout for Greece. On average, the loans will run for 32.5 years at an interest rate of around 1%. The IMF will not be involved initially but will decide on its involvement after the first review in October, once debt relief has been considered. IMF Chief Christine Lagarde said “significant” debt relief, “well beyond what has been considered so far”, is needed to allow for IMF involvement. Meanwhile, in her annual summer interview with ZDF, German Chancellor Angela Merkel said she has “no doubts” that the IMF will take part in the third Greek bailout, adding that there is “leeway on the extension of maturities, on interest rates.” However, in an interview with Deutsche Welle, German Finance Minister Wolfgang Schäuble said the scope for such relief was “not very big”. Handelsblatt cites a senior EU official suggesting that the Eurozone is considering extending the average loan maturity to 60 years.
The Bundestag will vote on the package on Wednesday to allow for the first tranche of funds to be disbursed on Thursday and allow the ECB to be paid. A large rebellion from Merkel’s CDU/CSU party is expected – although the package will pass thanks to support from her coalition partner, the SPD. The Dutch parliament has also been recalled and will debate the bailout on the same day. The Spanish parliament will debate and vote on the package tomorrow.
Meanwhile, Greek Energy Minister Panos Skourletis said it is “self-evident” that a confidence vote will be held in the Greek parliament, suggesting that, if the vote was lost, new elections would take place. Centre-left opposition party PASOK joined the centre-right New Democracy in saying that it would not support the current government in a confidence vote.
Open Europe’s Vincenzo Scarpetta appeared on CNN and the BBC Five Live Drive programme on Friday discussing the bailout agreement and the potential domestic political fallout in Greece.
Reuters The Financial Times The Wall Street Journal Kathimerini Bloomberg Eurogroup statement The International New York Times El País IMF statement Deutsche Welle CNN: Scarpetta
In her annual summer interview with ZDF, German Chancellor Angela Merkel described asylum policy as “the next great European project where we need to determine whether we are capable of joint action.” Specifically, she argued that the EU should commonly identify so-called safe states of origin which would allow for faster deportation of migrants to these countries. She also said that economic necessity was not grounds for claiming asylum, adding, “We cannot grant asylum to everyone who thinks they have a chance of getting it.” Meanwhile, in an interview with Die Welt, Bavaria’s Interior Minister Joachim Herrmann argues that Germany’s €143 per month allowance for asylum seekers should be “massively cut back” for migrants from the Western Balkans who have little chance of getting asylum in Germany.
The Daily Telegraph reports that EU officials spent more than £85 million in one year on specially issued credit cards to pay for meals and hotels. Unlike the UK, the EU is not planning to publish itemised credit card spending online because “the data is linked to the private accounts of staff”, officials said. Open Europe’s Pawel Swidlicki is quoted as saying, “If all EU officials’ expenses are above board there is no reason why these should not be made available for public scrutiny. Transparency is the best way of preventing abuse.”
The Daily Telegraph
Andrew Lansley, the former Health Secretary, used a speech to business leaders last week to suggest that the UK’s EU referendum was planned for next September. Lansley’s speaking notes, seen by The Sunday Times, said, “UK public expectations from renegotiation need to be realistic (and be downplayed at the outset) and then be exceeded…Other EU governments should recognise the need for UK ‘wins’, preferably following some ‘rows’.” A source present at the event said Lansley suggested there would be a “big row with the French” after next February’s European Council meeting and that everything would be “choreographed”.
The Sunday Times
The Daily Mail
The Times reports that, under new EU derivatives rules, British building societies and smaller banks may find it too expensive to keep providing fixed-rate mortgages. Lenders use derivatives to hedge against interest rate movements. New EU rules establish that over-the-counter derivatives, which are not traded on an exchange, must be cleared through a central counterparty – bringing costs up for smaller institutions.
Christoph Blocher, a Swiss billionaire and leading member of the right-wing Swiss People’s Party (SVP), has called on the Swiss government to take a tough line with the EU in the free movement negotiations. He said, “The fact is that voters have ended freedom of movement”, adding, “EU countries have the bigger interest in these treaties than does Switzerland” – referring to the trade agreements between the two sides. Meanwhile, Bloomberg reports that Switzerland is facing an influx of migrants either seeking asylum or passing through to reach other parts of Europe, making the issue a hot topic in October’s general election.
The ECB has given itself four years for an intrusive review of banks’ risk models which could result in them having to hold even more capital. The review was originally slated to take a year or two.
The Financial Times
The Irish Times reports that Joan Burton, leader of the Irish Labour Party and Deputy Prime Minister, will ask her party to back a vote transfer pact with their current coalition partners Fine Gael in the elections due to take place early next year. However, Burton will not ask for a statement of common policy aims.
The FT Weekend reported that, under new EU rules on cross-border legacies coming into effect today, people will be allowed to request that a property in another EU member state be bequeathed under the law of their home country. Some EU countries currently have ‘forced heirship’ rules in place – which mean that a certain share of a property must necessarily pass on to specific family members, for example children.