February 25, 2015
Eurozone signs off on Greek reforms though ECB and IMF raise concerns over lack of detail
The Eurozone yesterday signed off on Greece’s list of reforms paving the way for the four month extension of the financial assistance programme. The Eurogroup said the measures are “sufficiently comprehensive to be a valid starting point for a successful conclusion of the review,” though more detailed reform plan will need to be agreed by the end of April.
While ‘the institutions’ signed off on the list, the IMF and ECB were notably less enthusiastic than the Commission. IMF Chief Christine Lagarde said in her letter to the Eurogroup that the list “is generally not very specific” and is “not conveying clear assurances” that the government will complete the current programme. Crucially, she added that discussions on completing the review of Greece’s programme – on which funding is contingent – “cannot be confined within the policy perimeters outlined” in the list. In his own letter, ECB President Mario Draghi added that he “assumes” the basis for concluding the review “will be the existing commitments in the current Memorandum of Understanding,” from which the reform list “differs” in a number of areas.
Syriza MP Costas Lapavitsas said in an interview with Greek Star TV, “It is difficult to determine how the government can fulfil its promises, including the debt write-off, with this agreement.” Italy’s former Deputy Finance Minister Stefano Fassina – a member of the left wing of Prime Minister Matteo Renzi’s party – told La Stampa that Greece needs to leave the euro “if it wants to survive”. Greek Finance Minister Yanis Varoufakis told Charlie Hebdo that the Greek government has “killed the Troika” but work is still needed “to chase its spirit away and make its mentality disappear.”Greek Energy Minister Panagiotis Lafazanis told Greek newspaper Ethnos that the privatisations of electricity company PPC and power grid operator ADMIE won’t go ahead, despite both having already been put out to tender. The remarks appear to contradict the pledge not to stop sales that are already underway made by the Greek government in its reform list.
Meanwhile, officials said talks will begin on Greece’s funding gap, with Kathimerini reporting that the Greek government faces funding needs of €7.3bn in March alone. Germany’s Rheinische Post reports that, according to unnamed senior German officials, “It is absolutely clear that in the summer there will be a third programme”, which the paper suggests could amount to at least €20bn. The Bundestag is expected to approve the extension in a vote on Friday, while the lower house of the Dutch Parliament will wave it through tomorrow, though without a formal vote.
The Washington Post quotes Open Europe’s Raoul Ruparel as saying, “In the end, [the Greek reform] list seems very similar to what would have been implemented under the previous government, especially when it comes to areas such as pension reform.” Open Europe’s Vincenzo Scarpetta appeared on Italian business TV channel Class CNBC discussing the outcome of the negotiations between Greece and its Eurozone partners. Open Europe’s coverage of the situation in Greece featured on the Telegraph and the Guardian live blogs.
Sources: Open Europe Blog, Eurogroup statement, IMF letter, ECB letter, The Wall Street Journal, Kathimerini, Guardian Live Blog, The Washington Post, Telegraph Live Blog, Le Figaro, La Stampa, Rheinische Post, Die Welt, Reuters
In an interview with Dutch daily De Telegraaf, Belgian Central Bank Governor Luc Coene said the Eurozone had been “naïve” about the set-up of the single currency, saying, “We admitted countries [into the Eurozone] of which it could be expected that they would be pose problems.” He added, “If a country decided to leave, why shouldn’t it be allowed to happen? I can’t imagine what country that would be, but theoretically that can always happen.” He added that the introduction of debt pooling – for example through Eurobonds – is “inevitable” though the Eurozone still needs to “think” about how to do it.
In an interview with the Financial Times, Danièle Nouy, Head of the ECB’s Single Supervisory Mechanism, said, “It’s not so much about how much [capital] it’s about the definition of capital. There are too many, in my view, national options in the definition of capital in Europe and we have to address that…We may have to go to the legislature, to the European Parliament, to ask for more harmonisation in regulation.”
Source: The Financial Times
The European Commission will today unveil its plans for a single EU market in energy supplies, purchases and consumption, in an attempt to loosen reliance on Russian gas. “We see it as the most ambitious energy project since the coal and steel community,” EU Energy Commissioner Maroš Šefčovič said. “We have to move away from a fragmented system characterised by uncoordinated national policies… an energy union that speaks with one voice in global affairs,” he added. A UK Government spokesman is quoted by the Guardian reiterating its opposition to binding energy efficiency or renewable energy targets.
Drax, Britain’s largest power station, is bracing itself for the European Commission to launch a state aid investigation into plans to convert one of its coal units to burn biomass. Drax Chief Executive Dorothy Thompson accused the Commission of not knowing enough about biomass. “They have not had to deal with this type of application…Biomass has a really important role. It’s absolutely critical to meeting the 2020 [renewable] target,” she said.
Source: The Times
David Cameron has told a House of Commons Committee,”Over the course of the next month we’re going to be deploying British service personnel to [Ukraine to] provide advice and a range of training, to tactical intelligence to logistics, to medical care. We’ll also be developing an infantry training programme with Ukraine to improve the durability of their forces.” Separately, Lithuania has said it will reintroduce conscription.
During the annual debate on the state of the nation, Spanish Prime Minister Mariano Rajoy told parliament that the government will upgrade its 2015 GDP growth forecast from 2% to 2.4%.
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