Open Europe : press revieuw

[Politics.be]

Moody’s warns Spain over possible downgrade Moody’s credit rating agency has put Spain on a review for a downgrade, suggesting that the increased risk to bondholders from the second Greek bailout package “somewhat increases the potential for adverse market dynamics” for the Spanish economy. Meanwhile, Italy’s interest rate paid on ten year bonds jumped to 5.77% in a bond auction yesterday, up from 4.94% last month. CityAM notes that there were reports that, if Italy’s borrowing costs got too high, it could opt out of its share of the next tranche of the original Greek bailout, due in September.

French Finance Minister François Baroin has called for a rapid adoption of the second Greek bailout package, particularly the new structure of the eurozone bailout fund, the EFSF, stressing that rapid implementation of the plan “is clearly an element in the restoration of confidence”. Writing in the FT, Baroin and German Finance Minister Wolfgang Schäuble discuss the second Greek bailout plan arguing, “Our plan will rescue Greece and protect Europe”, however they note that the plan “alone will not dispel the risks of contagion”, adding that the widen scope of the EFSF is therefore crucial.

Demetris Christofias, the Cypriot President, dissolved the country’s cabinet yesterday, ahead of a reshuffle aimed at helping the country deal with its growing economic and energy crisis. The move increases fears that Cyprus will be forced to ask for an EU/IMF bailout in the near future.
FT FT 2 CityAM Telegraph IHT El Pais IHT 2 FT 3 WSJ EurActiv Irish Times IHT 3 WSJ 2 WSJ 3 FT 4 WSJ 4 Times El Pais 2 El Pais 3 Independent FT: Baroin & Schaeuble Economist Economist: Charlemagne FT: Brittain FT Editorial Economist 2

The WSJ’s Brussels Beat column reports on the Commission’s recent proposals to trim the EU’s employment budget. Open Europe’s Sian Herbert is quoted saying, "The Commission's proposal is certainly a step in the right direction, but remains too little, too late. For too long, the Commission has simply acted as a conveyer belt, with its employees confident of jobs for life. .... The entire culture needs to change."
WSJ Brussels Beat

Andrew Lilico: ECB has increased the final cost of the eurozone crisis
Open Europe in conjunction with the Centre for the Study of Financial Innovation (CSFI), hosted an event yesterday looking at the role of the ECB in the recent eurozone debt crisis. Presenting their recent paper on the topic, Open Europe’s Raoul Ruparel and Mats Persson, noted that the ECB’s balance sheet contains risky and hard to value assets which could face significant write downs if Greece, or any other eurozone country were to default. They also highlighted how ECB board members have given conflicting accounts over how such losses would be covered, raising questions about credibility.

Echoing the conclusions in the paper, Andrew Lilico, Director at Europe Economics, suggested that the ECB’s actions during the crisis may have actually made the final cost of the crisis higher than it would have been otherwise, due to the significant amount of risky lending it has engaged in, adding that Greece is likely to default next year. Ebrahim Rahbari, Citigroup, suggested the question was more of the ECB’s credibility than its solvency, since it could still act with negative equity, adding that the ECB’s inflation fighting credentials are not in question.
Open Europe events

Euractiv reports that the European Court of Justice yesterday confirmed that the Italian switchover from analogue to digital TV has been illegally subsidised. Italian PM Silvio Berlusconi's TV group Mediaset will now have to reimburse the Italian authorities a huge amount of illegal state aid.
EurActiv

Rumours were rife yesterday that Italian Finance Minister Giulio Tremonti was close to resigning, after he came under increasing pressure over links to a former aide currently facing corruption charges, although Tremonti quickly dismissed the claims.
FT

At a special meeting in Brussels, European security officials have responded to the recent killings in Norway by calling for a more thorough examination of ‘lone wolf’ terrorism by activists who operate without connections to any organisation.
Irish Times El Pais

After recent days of violence, EU Foreign Policy Chief Cathy Ashton has urged Kosovo and Serbia to defuse tensions and claimed that it is the responsibility of Belgrade and Pristina to restore calm and security.
Irish Times

The FT reports that under draft legislation unveiled yesterday, Ireland’s financial regulation could be greatly strengthened following the banking crisis. The reform bill aims to bolster the role of the central bank by giving it more powers to investigate the financial sector and fine or suspend those that misbehave.
FT


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