February 18, 2015
Greek government set to request extension in its loan agreement but not accompanying conditions
A Greek government spokesman confirmed this morning that Greece will today request an extension to its loan from the Eurozone. Reuters reported yesterday that, according to unnamed sources, Greece would seek a six month extension to the loan but not to the current programme of conditions. In an interview with ZDF, when asked specifically about such an option, German Finance Minister Wolfgang Schäuble said, “It’s not about extending a credit programme but about whether this bailout programme will be fulfilled, yes or no,” adding, “On 28 [February], at 24.00 hours, it’s over,” referring to the current programme.
Kathimerini reports that, as part of the deal, the Greek government is willing to commit to a moratorium of any steps which would affect Greece’s fiscal targets and agree to not roll back reforms. However, in a speech to the Greek Parliament yesterday, Greek Prime Minister Alexis Tsipras unveiled a number of policy measures specifically aimed at undoing reforms taken under the bailout. These include reversing deregulation of the labour market, specifically allowing a return to collective wage bargaining. Tsipras also said he would not accept an “ultimatum” from Europe and was in “no rush” to find a deal. Separately, the Greek Finance Ministry has this morning released its full negotiating documents from the last Eurogroup meetings to the Greek media.
Meanwhile, the ECB will today review Greek banks access to the Emergency Liquidity Assistance (ELA) line. The ECB is expected to approve continued access. However, the crucial question will be whether it raises the limit again from €65bn given that deposit outflows have continued, putting Greek banks under more funding pressure.
Kathimerini also reports that the Greek government could face a funding crunch on 24 February, after data released yesterday showed the central administration has a slight net cash deficit. Open Europe’s Nina Schick appeared on Monocle 24 radio discussing the Greek developments, while Pieter Cleppe appeared on Euranet TV. CNN Money cites Open Europe’s estimates of Greek debt held by official institutions, and The Wall Street Journal’s Money Beat blog cites Open Europe’s assessment of where Greece might find agreement with the Eurozone on its economic plans. Writing in the Daily Telegraph, Open Europe’s Mats Persson argues Greek Finance Minister Yanis Varoufakis has “overplayed his hand and Greece will have to make a deal to stay in the Eurozone”.
Russian President Vladimir Putin yesterday visited Budapest where he received a warm welcome from Hungarian Prime Minister Viktor Orban, later reaching an agreement over a new gas deal. Orban argued that “locking Russia out of Europe is not rational… Whoever thinks that Europe can be competitive, that the European economy can be competitive without economic cooperation with Russia, whoever thinks that energy security can exist in Europe without the energy that comes from Russia, is chasing ghosts.”
Meanwhile, intense fighting continued in and around the key strategic hub of Debaltseve with Russian-backed separatists strengthening their grip, with Ukrainian forces increasingly starting to pull-back from the area.
Jonathan Hill, the European Commissioner for Financial Services, will today unveil plans for the EU’s Capital Markets Union. He told The Financial Times that encouraging securitisation as a means of fund raising will form part of the plans, saying “I don’t want a return to the bad old days. But all securitisation has been tarnished with the same brush… Let me be clear, I have no intention to relax the core of these rules. But there may be elements where we can lighten the regulatory burden for investors.” Separately, Hill tells the paper that with regards to relations between the EU and the UK he aims to play a translation role helping to foster a policy of “no surprises.”
French Prime Minister Manuel Valls yesterday invoked a special constitutional procedure to allow the French government to push through its flagship liberalisation bill drafted by Economy Minister Emmanuel Macron without a vote in the National Assembly – the lower house of the French parliament. The decision is due to fear that a rebel fringe of up to 40 Socialist MPs would vote against the bill – making it very likely to be rejected. As a result, the French government will instead face a confidence vote in the National Assembly on Thursday evening, but is likely to survive. The Macron bill still needs to be approved by the Senate, the upper house of the French parliament, and may therefore return to the National Assembly for a second reading later this year.
Harriet Yeo, a former chairman of Labour’s ruling body, the National Executive Committee, has resigned and joined UKIP, citing labour’s failure to back an EU referendum. “It is time to decide whether we remain in the EU,” she writes in the Daily Telegraph, “The only party I trust to offer us that choice is UKIP.” Separately, John Mills, a major Labour donor, will tell a conference in London today that Labour will “inevitably weaken the UK’s bargaining position” if Ed Miliband becomes Prime Minister and does not commit to an EU referendum.
Les Echos reports that alternative taxi service Uber has filed a legal complaint with the European Commission against a French law passed last September which, among other things, forbids chauffeured vehicles other than officially licensed taxis from being located by customers via smartphone applications. Uber argues that the French law breaches EU rules on freedom to provide services. The article notes that Uber is expected to file similar lawsuits against Germany and Spain shortly.
Euractiv reports on a draft plan for Energy Union that would give the European Commission the ability to scrutinise member state’s energy deals with non-EU nations before they are signed.
A new Forsa poll for Stern finds that 46% of Germans think that Chancellor Angela Merkel – already the longest-serving incumbent head of government in the EU – should run for a fourth term.
In a somewhat surprising turn, the Greek government yesterday announced that former conservative Interior Minister Prokopis Pavlopoulos would be their new candidate for Greek President. The announcement was expectedly backed by the opposition New Democracy, since he is one of their own. The first round of voting will take place in the Greek Parliament tonight, with Pavlopoulos expected to be approved.
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