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Speaking after a meeting of EU finance ministers in Brussels yesterday, German Finance Minister Wolfgang Schäuble said, “There are many people, also in the German federal government, that are pretty well convinced that [a Greek euro exit] would be a much better solution for Greece and the Greek people. But it’s something that only [the Greeks] can do themselves.”
Luc Coene, a member of the ECB’s supervisory board and a former Belgian Central Bank Governor, told Belgian daily De Tijd that a Grexit may have been a better option, arguing, “Because of the depreciation of the currency, one can achieve more through increased exports in a less painful manner.”
Meanwhile, Greek Prime Minister Alexis Tsipras told Greek state broadcaster ERT yesterday, “I’m fully assuming my responsibilities, for mistakes and for oversights, and for the responsibility of signing a text that I do not believe in, but that I am obliged to implement.” He added, “I won’t escape these responsibilities and will try to implement my political program over a four-year period” – a clear hint that he is not planning to resign. Tsipras also accused Greece’s creditors of including “illogical” measures in the deal – such as the VAT hikes on hotels and restaurants.
The Greek parliament is tonight due to vote on a first series of reforms needed to start negotiations over a third bailout. Tsipras is likely to face a party rebellion, but the measures are expected to pass with support from opposition parties. A new Kapa Institute/To Vima poll shows that 51.5% of Greeks said they approved of the bailout deal, while 70.1% said that the Greek parliament should vote to pass the package.
Open Europe’s Vincenzo Scarpetta is quoted by Bloomberg on what the Greek deal means for other anti-austerity parties across Europe. “The capitulation of Tsipras and the further deterioration of the Greek economy since SYIRZA took the helm are likely to turn undecided voters in other countries away from supporting similar parties,” he argues. Separately, Open Europe co-Director Raoul Ruparel is quoted by Poland’s TVN24 discussing the difficulties in implementing Greece’s privatisation programme.
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The Financial Times reports that last night the European Commission formally submitted a request to tap the EU-wide European Financial Stability Mechanism (EFSM), which has a remaining lending capacity of €11.5bn, in order to provide bridge financing to Greece while a third bailout via the Eurozone’s permanent bailout fund, the European Stability Mechanism (ESM) is negotiated. The UK, the Czech Republic, Sweden and Denmark have all voiced their opposition to the idea of deploying the EFSM but the decision only requires a qualified majority, not unanimity. German Finance Minister Wolfgang Schäuble described the idea of using the EFSM as “not constructive,” in light of opposition from non-Eurozone countries.
Open Europe co-Director Raoul Ruparel is quoted in City AM arguing that “It was a clear political promise that [the EFSM] would not be used anymore so it raises a lot of questions about trust. The UK already has concerns over the dominance of the Eurozone within the EU.” He added that, if the EFSM ended up being used, that “would certainly strengthen the case of those who want to see the UK leave.”
The Financial Times
The Wall Street Journal
The Daily Mail
Reuters and the Financial Times report that the IMF may decide not to take part in the third Greek bailout if the package does not include substantial debt relief. A leaked memo reads, “Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.” An updated IMF debt sustainability analysis also found that Greek debt would stand at 170% of GDP in 2022 compared to 142% in the previous version from just two weeks ago. Debt is also seen to peak at 200% of GDP compared to 177% in previous version.
French Finance Minister Michel Sapin told BFM TV this morning, “The IMF is saying the same thing as we are…We need to help Greece but we won’t be able to do so if we maintain the same debt burden on the Greek economy.” He added, “It is not because you push back a bit the interest payment date that you have lost capital. We would have lost everything if Greece had left the euro.”
The Financial Times
BFM TV: Sapin
In an op-ed for Politico, Open Europe Co-Director Raoul Ruparel argues that the Greek crisis has exposed the underlying tension between Paris and Berlin on the construction of the Eurozone. With the latter willing to consider Grexit, and the former opposed, Raoul argues that the German view has still come out on top. “This is very much a deal which Germany (and probably its allies) would have been happy to sign up to a month, or six months, ago. The basic premise for keeping Greece in the Eurozone was cash in exchange for strict reforms and adherence to the rules. This program is very much along those lines — in fact it involves more austerity, stricter and faster reforms, and greater oversight and involvement on the ground in Athens as well as significantly more privatization than previous offers. Secondly, and following from this, the deal very much maintains the German view of a rules-based Eurozone system. It has a clear framework and rule-set which countries adhere to or leave. In Germany’s view, Greece was given a choice and eventually chose to come around to signing up for these rules.”
Raoul concludes, “The balance of power between the two may well ultimately determine the future path of the Eurozone. Currently, Germany’s rules-based system with minimal changes to the Eurozone’s architecture seems to be winning out.”
EurActiv reports that European Energy and Climate Commissioner Miguel Arias Cañete is considering relaxing EU rules which prohibit VAT relief for investments in improving the energy efficiency of buildings after the UK lost a case at the ECJ concerning its application of a discounted VAT rate of 5% to building materials for efficiency renovation.
The European Commission has asked Germany to provide more information on its “regulatory framework regarding taxis and rental cars with drivers,” following a complaint by the taxi-app Uber, reports the German Press Agency (DPA). It is still not known whether or not the Commission will launch a formal procedure against Germany. Uber claims that the German Passenger Transport Act means that it faces unfair discrimination, “Although we have a digital service platform, we are covered by laws that were legislated in 1950s,” a spokesman said.
Deutsche Presse Agentur