23 February 2015

Greece readies list of reforms for Eurozone following late night deal on Friday

Late on Friday night Greece reached a deal with its Eurozone partners to extend its current financial assistance agreement by four months. As part of the deal Greece will today send a list of reform proposals to the Eurogroup which will need to be “sufficiently comprehensive to be a valid starting point for a successful conclusion of the [final bailout] review”, once this is approved then the deal will be confirmed. Eurozone finance ministers will hold a call tomorrow.

The list is expected to focus on structural reforms in areas such as tax evasion, corruption and public administration. Bild reports that the package will be worth up to €7bn – €1.5bn each from raising taxes on wealthy Greeks and cutting tax evasion, as well as a further €2.3bn from cracking down on fuel and cigarette smuggling.

Speaking over the weekend, Greek Prime Minister Alexis Tsipras said, “We won a battle, but not the war. The difficulties lie ahead of us,” adding that the deal marked the start of “leaving austerity, the bailouts and the Troika behind.”

However, SYRIZA MEP Manolis Glezos said in an open letter on his blog, “By renaming the troika ‘the institutions’, the memorandum as ‘agreement’ and the lenders as ‘partners’…you do not change the previous situation.” He also apologised to voters for being complicit in SYRIZA’s approach. However, on Sunday Greek daily To Vima declared the deal an “honourable compromise”.

German Finance Minister Wolfgang Schäuble said, “Being in government is a date with reality, and reality is often not as nice as a dream,” adding, “The Greeks certainly will have a difficult time to explain the deal to their voters.”

Irish Finance Minister Michael Noonan said in an interview with RTE that the biggest risk was that Greek banks would have gone “belly up” on Wednesday, adding that the deal mainly “ensures Greece doesn’t collapse next week” and there will be more negotiations on what is “effectively” a third programme for Greece. Open Europe’s analysis of the Greek negotiations drew widespread coverage, see below for more details.

Source: Open Europe blog Eurogroup statement on Greece Reuters Reuters 2 The Financial Times The Wall Street Journal Handelsblatt Reuters Deutschland

Daily Shakeup RSS Feed

Fighting in eastern Ukraine subsides but sporadic attacks continue

Fighting in eastern Ukraine subsided over the weekend and on Sunday Ukrainian troops and Russian-backed separatists exchanged around 200 prisoners. However, sporadic attacks continued to take place as both sides maintained their heavy weaponry along the front line in contravention of the Minsk agreement. Meanwhile, the presidents of Poland, Lithuania and Slovakia and European Council President Donald Tusk joined Ukrainian president Petro Poroshenko for a peace rally in Kiev to commemorate protesters killed during last year’s Maidan protests, while at a similar march in Kharkiv a bomb blast killed two participants.

Source: The Daily Telegraph BBC The Financial Times Reuters

New poll: Only 27.4% of Italians trust the EU

According to a new Demos poll for La Repubblica, only 27.4% of Italians trust the EU – the lowest level of the six EU countries polled. This compares to 28% in the UK, 40.5% in Spain, 42.1% in Poland, 43% in France, and 53.4% in Germany.

Source: La Repubblica

Moscovici warns France of possible EU sanctions on deficit targets

EU Economic and Monetary Affairs Commissioner Pierre Moscovici told France 2 this morning, “It’s indispensable that [France’s structural] deficit is reduced at the pace envisaged by European rules…There can be no exemption from the rules. If reforms aren’t done, if the deficit is not reduced, then we don’t have a choice” but to impose sanctions.

Source: La Tribune

Gabriel calls for stricter rules over contested investor-state dispute settlement while German support for EU-US free trade deal drops

In a position paper on the free trade agreement between the EU and Canada (CETA), initiated by the German Economy Minister and Vice-Chancellor Sigmar Gabriel, the SPD calls for stricter rules for the contested investor-state dispute settlement (ISDS) clause. Instead of private arbitration courts, the paper foresees the creation of a Court of Justice for trade and investment whose rulings can be subject to appeals. The paper also states that banking resolutions or debt write-downs should not give cause for complaint and that foreign investors should not be treated more favourably over national investors. The agreement over the ISDS clause for CETA will serve as a blueprint for the free trade deal with the US (TTIP).

Meanwhile, an Emnid Poll for Foodwatch shows that German public support for TTIP has dropped from 48% in October 2014 to 39%. 20% say that they don’t know enough to make an informed decision. Gabriel and EU Trade Commissioner Cecelia Malmström will be discussing the ratification of CETA as well as the continuing TTIP negotiations in Berlin today.

Source: Frankfurter Allgemeine Zeitung Foodwatch

New poll finds majority of voters do not want either Tories or Labour to strike post-election pact with UKIP

A new YouGov poll for the Sun has found that 51% of voters want David Cameron to rule out a post-election pact with UKIP in order to remain as Prime Minister with 30% saying he should leave the option open. 57% of voters want Ed Miliband to likewise rule out a deal with UKIP compared with 24% who say he should leave the option open. In contrast, 29% of voters say both main party leaders should rule out a deal with the Liberal Democrats while 39% say Miliband should rule out a deal with the SNP.

Source: The Sun

US units of two large European banks expected to fail Fed stress test

The Wall Street Journal reports that the US units of large European banks Deutsche Bank and Santander look set to fail the stress tests performed by the US Federal Reserve due to concerns over how they measure and predict potential losses and risks on their balance sheets.

Source: The Wall Street Journal

Hungary’s Fidesz loses ‘supermajority’

Hungary’s ruling party Fidesz lost its two-thirds ‘supermajority in parliament after a by-election defeat in the city of Veszprem on Sunday. The supermajority, which Fidesz has held since its electoral victory in 2010, allowed Prime Minister Viktor Orban to pass a new constitution and other laws without the support of other parties. Separately, The Financial Times reports that Hungary’s deal to award €12bn of nuclear power contracts to a Russian state-owned company may be blocked by EU regulators, in a blow to Orban’s attempts to forge closer ties to Moscow.

Source: BBC The Financial Times Süddeutsche Zeitung

EU plans to import gas from Azerbaijan and Turkmenistan

In order to accelerate diversification of natural gas import, the European Commission intends to start negotiations with Azerbaijan and Turkmenistan with the aim to sign a Memorandum of Understanding this year, Spiegel Online reports.

Source: Spiegel Online

EU considering investigating UK faith schools

Saturday’s Daily Mail reported that the European Commission is considering investigating faith schools for allegedly discriminating against non-religious teachers. Under EU rules employers have to prove a ‘genuine occupational requirement’ in order to discriminate in favour of a religious candidate.

Source: The Daily Mail

Only 22% of French back Sarkozy as next president

An opinion poll conducted by BVA, has found that only 22% of French people want Nicolas Sarkozy to be a candidate during the next presidential elections in 2017 – a 11% decrease compared to July last year. Separately a survey by Ifop has found Francois Hollande has a popularity score of just 24%.

Source: Le Monde France TV Info

Romanian PM’s family suspected of EU fraud

Romania Journal reports that Romanian PM Victor Ponta’s sister and brother in law are suspected of fraud with EU funds, reports.

Source: Romania Journal Economist

Open Europe’s analysis of Greek talks draws widespread coverage

Open Europe’s analysis of the Greek crisis has drawn extensive coverage over the past couple of days. Our Head of Economic Research Raoul Ruparel appeared on Adam Boulton’s Sky News Tonight, alongside former Cypriot central banker Panicos Demetriades on Friday, shortly after the end of the Eurogroup meeting. Raoul also appeared on BBC World on Friday and is quoted by the Guardian, The International New York Times and Spanish news agency EFE as saying that the deal “is almost a total capitulation. [Greek Prime Minister] Tsipras gambled on austerity fatigue in Europe and thought that by flying the flag for change lots of other countries would follow his lead. None did.” Our Director Mats Persson appeared on BBC News on Friday, discussing Germany’s position in the negotiations with Greece. Our policy analyst Vincenzo Scarpetta appeared on LBC radio on Friday and on Al-Jazeera English on Saturday. He was also quoted by German news agency DPA before the Eurogroup meeting as saying, “Both Spain and Portugal have elections this year, and given that their governments are the ones that have had to implement the austerity and reform policies of the last years, they are not particularly keen to see SYRIZA win important concessions. That would be tantamount to showing their electorates that an alternative [to such unpopular measures] is possible.” Our Communications Director Nina Schick appeared on Al-Jazeera English Inside Story on Saturday arguing that if Syriza failed to deliver on its election promises, while our man in Brussels Pieter Cleppe is quoted by Belgian daily De Morgen as saying, “The party leadership of SYRIZA knows that a Greek euro exit is not in their interest, despite any possible positive long-term effects for Greece.” Our instant analysis of the deal struck at Friday’s Eurogroup has been reproduced by ZeroHedge and widely cited by The Telegraph and Guardian live blogs.