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Eurozone set for showdown meeting after Germany rejects Greece request to extend financial assistance

The Greek government yesterday officially submitted its request to extend its current financial assistance agreement with the Eurozone – the Master Financial Assistance Facility Agreement (MFAFA). The letter from Greek Finance Minister Yanis Varoufakis to the Eurogroup seemed to accept that such an extension was tied to the current reform programme, though it also requested negotiations over fiscal targets and longer term debt relief.

However, the request was swiftly rejected out of hand by the German Finance Ministry, with spokesman Martin Jäger saying, “The letter from Athens is not a substantial proposal for a solution. Realistically, it aims for a bridge programme, without fulfilling the conditions of the Programme. The letter does not fulfil the criterion agreed in the Eurogroup on Monday.” Officials from the euro working group gathered last night and leaked documents suggest that German officials labelled the Greek request a “Trojan horse”. The officials added that it leaves “immense room for interpretation”, specifically because it does not clearly commit Greece to completing the current programme, falls short of stopping unilateral action and does not make clear how Greece will fund itself over the coming weeks. A spokesman for Belgian Finance Minister Johan Van Overtveldt said, “At first reading it appears that the concerns of the Eurogroup have not been addressed” in the Greek request.

Following the rejection Greek Prime Minister Alexis Tsipras held a call with German Chancellor Angela Merkel, which officials described as “constructive”, and also with French President François Hollande. Eurozone finance ministers will meet in Brussels later today to try to finalise an agreement. Varoufakis has said the group has to make a simple choice, yes or no to the Greek request. Meanwhile, a high ranking Syriza MP told DPA that if today’s Eurogroup meeting fails, Greece will immediately call for a European Council summit.

Italian Prime Minister Matteo Renzi told public broadcaster RAI, “Italy is working like a zip between the most rigid, austere [Eurozone] countries and Greece… The Greek government can’t try to be clever and let the others pay. But a minimum of flexibility must be given when reforms are made.” Spanish Finance Minister Luis de Guindos told a conference yesterday, “[The Greeks] need us to pay pensions, to pay civil servants, doctors. Therefore, they perfectly know that they must reach an agreement with us.” Meanwhile, European Commission President Jean-Claude Juncker said the request was a “positive sign” while French Prime Minister Manuel Valls said it was “a very encouraging sign” that a deal can be struck quickly. Finnish Finance Minister Antti Rinne said, “Last night, a spark of hope arose that an understanding could be reached.”

Open Europe’s Raoul Ruparel appeared on BBC Radio 5 Live yesterday and on BBC Radio 4’s Today programme this morning discussing the Greek situation ahead of today’s Eurogroup. Raoul is also quoted by the Guardian. Open Europe’s live coverage of Greece is cited by the Guardian Live Blog and Danish daily Berlingske. Open Europe’s Vincenzo Scarpetta is quoted by the International Business Times discussing the possible options for Greece to get funding outside of the EU.

Sources: Open Europe Live Blog, Kathimerini, Reuters, The Financial Times, Euro2day, The Wall Street Journal, La Repubblica, Tele Cinco, International Business Times, Berlingske, The Guardian, The Guardian Live Blog

  • Germany united behind Schäuble: “The Greeks behaved like elephants in a china shop”

    The rejection of the German Finance Ministry to Athens’ plea for a six-month extension of its current programme has been overwhelmingly welcomed in Germany. A new Emnid poll for N24 finds that 52% of Germans think that the demands made by Greece’s Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis are “outrageous”, 41% say they are “naive,” while 13% said they “secretly admired” Tsipras and Varoufakis.

    Meanwhile, German tabloid Bild leads with the headline, “Germany says: thank you Wolfgang Schäuble! Finally someone says ‘no’ to the bankrupt Greeks.” Klaus Dieter Frankenberger, Foreign Policy Editor for Frankfurter Allgemeine Zeitung, writes, “It is time that the Tsipras government grasps reality… and understands how great the resentment is in many European countries over the Greece issue. Many citizens are sick of it.” In a leader for Die Welt, Deputy Editor in Chief, Andrea Seibel writes, “We see the statement of [Schäuble] as a wake-up call. None of his colleagues would have dared anything of the kind. It is exactly the language understood by Athens.” Stefan Kornelius, Foreign Editor of the left-leaning Süddeutsche Zeitung, writes that Schäuble’s objection is right, as the letter from Athens is “full of interpretation traps that would keep any legal expert awake at night.”

    Speaking to Deutschlandfund radio this morning, European Energy Commissioner Günther Oettinger said that the Greeks have “behaved like elephants in a China shop,” saying the letter from Athens was by “no means sufficient” and urging Varoufakis to take “authentic responsibility” at today’s Eurogroup meeting. A more conciliatory tone was struck by German Vice Chancellor and Economy Minister Sigmar Gabriel of the SPD, who said, “We should use this new attitude by the Greek government as a starting point for negotiations, and not publicly reject them beforehand.”

    Sources: Open Europe Live Blog, Bild, Die Welt: Seibel, Frankfurter Allgemeine Zeitung, Frankfurter Allgemeine Zeitung: Frankenberger, Süddeutsche Zeitung: Cornelius

  • French government survives confidence vote on liberalisation bill

    The French government yesterday survived a confidence vote in the lower house of the French parliament, the National Assembly. The no-confidence motion was tabled by the opposition after French Prime Minister Manuel Valls decided to force through the government’s flagship liberalisation bill without a vote in parliament. Open Europe’s Vincenzo Scarpetta is quoted by City AM as saying that the episode “confirms that the Socialist Prime Minister is struggling to rally his party behind important economic reforms.”

    Sources: Open Europe Blog, City AM, Le Figaro, The Financial Times, The Wall Street Journal

  • ECB’s first set of minutes highlights deflationary concerns

    The ECB yesterday released its first ‘account of monetary policy meeting’, which gave greater details to the discussions had at the meetings on the 21 and 22 January – when the ECB decided to launch its Quantitative Easing (QE) programme. The accounts reveal that the ECB had serious concerns about deflationary forces and feared an approach of “benign neglect”. The release highlighted that some members were in favour of a wait and see approach, though the large majority did not. The accounts did not include any break down of the voting or specific positions of any of the ECB Governing Council members.

    Sources: ECB press release, The Wall Street Journal

  • Left wing SPD MPs calling for changes to free trade deal with Canada

    Süddeutsche Zeitung reports that a group of 90 left wing SPD MPs will publish a position paper today in which they demand changes to the EU’s free trade agreement with Canada (CETA) – which has been concluded but not yet ratified – including the abolition of the investor-state dispute settlement (ISDS) clause.

    Source: Süddeutsche Zeitung

  • House of Lords criticises UK and EU handling of Ukraine crisis

    A report by the House of Lords’ committee on foreign affairs has strongly criticised the UK’s handling of the Ukraine crisis. The committee argued that as a signatory to the 1994 Budapest memorandum, “the UK had a particular responsibility towards [Ukraine] and it has not been as active or as visible as it could have been”. The report also criticises the EU, arguing that “Member states have been slow to reappraise the relationship and to adapt to the realities of the Russia we have today.” Open Europe’s written evidence to the Committee, looking at the exposure of the UK to the crisis and sanctions as well as the economic impact of sanctions so far is cited extensively by the report.

    Sources: House of Lords report, Open Europe written evidence, The Guardian

  • Lord Ashcroft: Conservatives ahead in four key UKIP/Conservative marginal seats

    A poll of four key constituencies where the Conservatives’ main rival is UKIP conducted by Lord Ashcroft has found that despite a substantial swing to UKIP since 2010, the Conservatives remain ahead in all four, although only by a small majority in three of them.

    Sources: Lord Ashcroft Polls, The Daily Telegraph

  • Polish Prime Minister Ewa Kopacz criticises Hungarian policy towards Russia and Ukraine

    Polish Prime Minister Ewa Kopacz met yesterday with her Hungarian counterpart Viktor Orbán, a day after Russian President Vladimir Putin’s visit to Budapest. At the subsequent press conference, she said that “during a forthright and difficult conversation I told Prime Minister Orban that the unity of EU member states and the Visegrad Group are of fundamental importance… Poland and Hungary have always lost out when in international politics the rule of law was replaced by force.”

    Sources: Gazeta Wyborcza, TVN24, Polskie Radio

  • Home Office wants non-EU migrants to provide criminal records

    The Home Office is considering making applicants for visas in some categories produce a police certificate from their home country disclosing whether they had a clean criminal record or had committed offences. The plan would not apply to migrants from the EU as this would be contrary to EU law.

    Source: The Times

  • EU extends joint Italian Coastal Border-Control Mission until the end of 2015

    The European Commission has said it will extend “Operation Triton”, its joint coastal border control mission with Italy, until the end of 2015 and increase its resources.

    Source: The Wall Street Journal

  • Nobel winners urge Juncker not to cut funding for research

    27 Nobel laureates have written to EU Commission President Jean-Claude Juncker to express their “dismay” at plans to transfer €2.7bn currently spent on research into a new €315bn EU infrastructure fund.

    Source: The Independent

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