27 April 2015

Greek Finance Minister increasingly side-lined as some Eurozone members begin to raise the prospect of a Plan B for Greece

Reports over the weekend confirm that Greek Finance Minister Yanis Varoufakis was entirely isolated at Friday’s meeting of Eurozone finance ministers in Riga, with many expressing anger at the lack of progress in meeting the programme agreed upon in February. There are numerous reports suggesting Varoufakis is being increasingly side-lined as Greek Prime Minister Alexis Tsipras began calling EU leaders personally over the weekend. Slovenian Finance Minister Dušan Mramor confirmed he and others raised the issue of “what we will do if…the new program is not achieved in time for Greece to be able to finance itself”, though the prospect was dismissed by Varoufakis and Eurogroup Chief Jeroen Dijsselbloem.

When asked about whether Germany is preparing for a potential Grexit, German Finance Minister Wolfgang Schäuble refused to answer but compared the situation to Germany before reunification, suggesting if you had asked any politicians about those plans they would have denied they existed. Greek Foreign Minister Nikos Kotzias questioned whether Germany wanted to “punish” Greece and “make an example” of a country with a leftist government. He also warned that, if a deal is not found, “Golden Dawn is coming.”

Meanwhile, a poll by Kapa Research published in yesterday’s To Vima found that 72% of Greeks want an agreement to be found with Greece’s creditors, while 73% said Greece must stay in the Eurozone. A poll by Alco published in Proto Thema paper yesterday found that 50% of Greeks want the government to compromise even if the Eurozone rejects the government’s demands, compared to 36% who do not. Separately, Commission Vice President Valdis Dombrovskis said in an interview with Handelsblatt that the Commission’s spring economic growth forecast for Greece this year would be much “more pessimistic” than the 2.5% predicted in December.

Source: Kathimerini The Financial Times City AM Frankfurter Allgemeine Zeitung Handelsblatt To Vima Proto Thema

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Leaked Commission document suggests less than a quarter of economic reforms have been implemented in the EU

Reuters reports that, according to a leaked European Commission document presented at Friday’s meeting of EU finance ministers, only “about one fourth” of recommended economic reforms have been followed by “satisfactory implementation.” The report also found that the “pace of reforms has slowed in a majority of EU economies in the past two years.”

Source: Reuters

Spain announces desire to hold chairmanship of the Eurogroup

Spanish Finance Minister Luis de Guidos on Friday announced his candidacy for Head of the Eurogroup – the group of Eurozone finance ministers – saying, “we believe we stand a good chance…we have support.” Current Eurogroup Chief Jeroen Dijsselbloem’s term expires in July though he is keen to continue in the post.

Source: Reuters

Portuguese governing coalition parties agree to run on joint ticket in this year’s election

The two parties which form Portugal’s governing coalition – the Social Democrats and the Popular Party – have confirmed they will run on a joint ticket at the national elections later this year. The latest polling puts the coalition on 34.7% compared to 37.5% for the opposition Socialist party.

Source: The Financial Times

Bertelsmann: Brexit could cost the UK between 0.6% and 3% of GDP by 2030

A new study by the Bertelsmann Stiftung has found that a UK exit from the EU would most likely lead to permanent loss of between 0.6% and 3% of GDP by 2030, depending on the subsequent trade arrangements. However, in the most extreme case factoring in the dynamic economic consequences of weaker innovation and the impact on the City of London, UK GDP could fall by up to 14%. The study also found that Brexit would also hit Germany which would suffer a loss of between 0.1% and 2% of GDP by 2030 and have to pay an extra €2.5bn per year into the EU budget.

Source: Bertelsmann Stiftung

New Finnish government coalition to be announced 6 or 7th of May

Yle reports that Finland’s apparent Prime Minister-elect Juha Sipilä will announce the makeup of his new government coalition on 6 or 7th of May. The paper also reports that, according to a poll by Lännen Media, 55% of Centre Party members would prefer the party form a coalition with the Social Democrat Party over outgoing Prime Minister Alexander Stubb’s National Coalition Party, in order to maintain the promise of a new ‘social contract’.

Source: Yle Yle 2

Germany presses Ukraine to fulfil Minsk ceasefire agreement

The Financial Times reports that Germany is pressing Ukraine to implement the Minsk deal including provisions on decentralisation as fast as possible in order to prevent Russia using it as an excuse to renew fighting. Separately, the paper reports on Ukraine President Petro Poroshenko’s attempts to crack down on the oligarchs’; grip on politics.

Source: The Financial Times The Financial Times 2

New Northern Cypriot President promises renewed reunification effort

Voters in Northern Cyprus have elected the moderate independent Mustafa Akinci as their new president with 60.3% of the vote. Speaking after the election, he argued Greek Cypriot President “[Mr] Anastasiades and I are [of] the same generation… If we can’t solve this now, it will be a tremendous burden on future generations.”’

Source: BBC

Labour victory could lower prospects of Brexit over five years but increase them over ten

In a new briefing, Open Europe assesses the long term implications of a range of General Election outcomes for UK-EU relations, concluding that while the immediate risk of Brexit would recede under a Labour government, due to a range of factors including the lack of substantial EU reform and the possibility of the Tories adopting a tougher EU stance in opposition, it could increase over the longer-term.

Open Europe’s Pawel Swidlicki was quoted in Saturday’s Daily Mail arguing that “the EU will not cease to be an issue in UK politics. An EU referendum could still only be one election away and without reform under the next government such a referendum would be far more likely to result in Brexit.” Writing for Conservative Home, Open Europe’s Christopher Howarth argues that “a vote for EU reform backed up by a referendum – is, if robustly pursued, perhaps the change the EU needs in order to stay together.”