16 July 2015

Schäuble reiterates temporary euro exit “better path for Greece”

In an interview with German radio Deutschlandfunk this morning, German Finance Minister Wolfgang Schäuble reiterated that a temporary euro exit “would perhaps be the better path for Greece,” and added, “Everybody knows that a [debt] haircut is incompatible with membership of the monetary union.” Austrian Chancellor Werner Faymann yesterday made a rare criticism of Germany saying that he did not think that it was “morally right” to propose a temporary euro exit for Greece. He added, “Germany plays a leading role in Europe, and in this instance it hasn’t been positive.”

Meanwhile, the Greek parliament yesterday passed a first batch of measures needed to start negotiations with creditors over a third bailout package. 229 of 300 Greek MPs backed the measures. 32 MPs from Greek Prime Minister Alexis Tsipras’s SYRIZA party voted against and six abstained. Tsipras reportedly told a meeting of SYRIZA MPs ahead of the vote, “Either we stay united tonight, or it will be difficult for me to stay on as Prime Minister tomorrow.” Former Greek Finance Minister Yanis Varoufakis and Energy Minister Panagiotis Lafazanis were among the SYRIZA dissenters. Greek Deputy Finance Minister Nadia Valavani stepped down yesterday before the vote. The Independent Greeks, Tsipras’s junior coalition partner, surprisingly voted in favour of the measures. During the debate, protesters clashed with the police outside the Greek parliament.

French MPs yesterday voted in favour of starting negotiations with Greece by an overwhelming majority of 412 to 69. The German Bundestag will vote tomorrow, while it was announced yesterday that Spanish MPs will also hold a vote at some point in the first half of August. The Finnish Finance Minister, Alexander Stubb, said that his government will this morning seek a mandate from MPs to start talks on a third programme for Greece. Eurozone finance ministers will today hold a conference call to discuss the next steps in light of the vote in the Greek parliament. Speaking to German broadcaster ARD’s Morgenmagazin show, Klaus Regling, head of the Eurozone’s ESM bailout fund said, “The sum [for the third Greek bailout] is not at least – but at most – €85bn. That’s what the Euro Summit decided over the weekend. I expect that a large part of that will come from the [ESM] rescue fund, maybe €50bn, because the IMF will also take part in the bailout package.”

Separately, a new Forsa/Stern poll finds that 55% of Germans think that Chancellor Angela Merkel was right to try and find a solution to keep Greece in the Eurozone, while 31% think she should have forced Greece to leave. 14% were undecided. Open Europe’s Vincenzo Scarpetta and Raoul Ruparel appeared on CNN International and BBC Radio Five Live respectively, discussing the latest developments in the Greek crisis.

Source: CNN International: Scarpetta El País Le Figaro Reuters Kathimerini Deutschlandfunk: Schäuble Frankfurter Allgemeine Zeitung ARD Morgenmagazin: Regling Stern

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EU wide bailout fund likely to be used for bridge loan to Greece despite UK objections

The EU is tomorrow likely to approve the use of the European Financial Stabilisation Mechanism (EFSM) to provide a €7bn bridge loan to Greece to hold it over until its full bailout programme is agreed. Non-Eurozone countries are likely to be insured against any financial risk through the use of ECB profits from holdings of Greek bonds. UK government officials suggested Prime Minister David Cameron was “frustrated” by the move but it is unlikely the UK will be able to block it. Addressing the House of Commons yesterday Cameron supported the IMF’s calls for debt relief for Greece.

Open Europe’s Raoul Ruparel is quoted by the Financial Times and City AM arguing that using the EFSM after promising not to is a “clear breach of trust”. Open Europe’s Stephen Booth is quoted by the Daily Telegraph as saying, “This type of political agreement, so readily jettisoned in a moment of Eurozone panic, is precisely the type of agreement Cameron may, at least in part, be relying on to secure his negotiations and sell them to the British public. This episode will only increase the domestic pressure for the UK to secure treaty changes to underpin EU reforms.”

Source: Open Europe blog The Financial Times City AM The Daily Telegraph The Times

Germany should leave Eurozone – view from Central and Eastern Europe

Parlamentnilisty, the Czech politics monthly and news portal, comments in a leader that if Greece wishes to remain in the Eurozone, it should be Germany who leaves instead. Germany and Greece are so economically different that they cannot possibly both keep the same currency. “If the EU remains determined to not allow anyone to leave the Eurozone, southern European debt and recession are going to become increasingly common over the next fifty years,” the piece argues. Germany has three options: Force a Grexit; leave the Eurozone itself, or step up to the reality of constantly supplying the southern countries in the bloc with money.

Separately, the Slovak financial daily Hospodárske Noviny argues in a leader that the Eurozone is risking too much over a “pointless deal with Greece.” Keeping Greece in the bloc is “a crystal-clear indication of the continuing moral crisis of European politicians. This is not moral integrity. The moral and courageous thing to do would be to find a real solution to the problem.” This lack of courage and integrity is heart of the EU’s problems – and Greece’s continued membership in the Eurozone is putting the entire Union at risk of bankruptcy.

Source: Hospodárske Noviny Parlamentnilisty

Sharp increase in people from outside Europe gaining free movement rights through EU citizenship

According to research by Oxford University’s Migration Observatory, there are now 264,000 people in Britain who were born outside Europe and then obtained EU “free movement” rights by living in another EU country. In 2004 the number stood at 78,000.

Source: The Daily Telegraph

European Commission to review rules on capital requirements in effort to boost growth

Lord Hill of Oareford, the European Commissioner for financial stability, has said that the Commission will review the amount of capital held by lenders, under the Capital Requirements Directive, as part of a plan to encourage growth. Lord Hill said that the Commission’s study would look at whether smaller companies and infrastructure investment had been harmed by the tough rules on bank capital since the financial crisis.

Source: The Times

Shadow cabinet minister helping to establish Brexit group

The Times reports that a leading shadow cabinet member, prominent Labour MPs and at least two major trade unions are holding discussions about forming their own campaign for Britain to leave the EU. One member of the mooted Left Out group said: “We are discussing whether you can deliver a new economy in Britain with a fiscally conservative EU. If you wanted to rebuild industry in the north, which we need to do, we have to do something about state aid and direct capital flows. A lot of this is forbidden by the EU.”

Source: The Times

Catalan pro-independence parties to form united front against Madrid

The two leading Catalan pro-independence parties – the governing centre-right CiU and the Republican Left of Catalonia – yesterday announced they had thrashed out an agreement to run a joint slate of candidates in September’s regional elections. The pro-independence factions say that the regional elections will serve as a de-facto referendum on independence, and that if they win, they will start a process to establish a Catalan state within a matter of months.

Source: The Wall Street Journal

EU launches competition investigations into US tech giant Qualcomm

The EU’s Competition Commissioner Margrethe Vestager announced that she would be launching an investigation into whether the US-based chip maker Qualcomm was guilty of violating the EU’s rules on so-called predatory pricing. The move is the latest in a series of EU investigations against US tech giants including Google, Amazon and Appl

Source: The Wall Street Journal