Monthly Archives: June 2011

It took six years of negotiations, but Croatia’s entry into the European Union is now officially a formality.

In a mad dash to the finish line, the Hungarian presidency managed to squeeze in one last mini-summit to consecrate the deal before the clock runs out on their six-month stint at the EU Council’s helm Thursday evening.

Now comes the behind-the-scenes work of translating that political agreement into an accession treaty which can be signed and ratified by the existing 27 EU members – and the Croats, of course. The drafting and translating into 23 languages should be done by the end of the year; the actual accession date is set for 1 July 2013. 

If the Greek crisis has taught us anything over the past few weeks it’s that going from a bail-out back into the financial markets is hard, and any rescue programme should be very conservative when it comes to estimating how much private-sector borrowing a bailed-out country will be able to do.

The recent scare occurred because a Greek gap opened in March 2012, when the original €110bn bail-out programme envisioned Athens dipping back into the bond market. Everyone now acknowledges this is impossible, particularly with 10-year Greek bonds still over 16 per cent, despite Wednesday’s rally driven by the successful Greek parliamentary vote on austerity measures.

As our friends and rivals at the Wall Street Journal have pointed out, detailed reports on Ireland show its programme has become much more conservative, with only about €3.4bn in private-sector borrowing called for in 2012 (originally it was €12.3bn; Greece was supposed to raise €15.9bn in the first quarter of 2012 alone). Read on for our first look at Portugal’s financing assumptions. 

EU budget negotiations, which kick off this week, are about three things: the size of the overall pot of money; which countries will pay into that pot; and which countries will get money out of it.

For those following the debate, here is your cut-out-and-keep Excel guide to those questions, plucked from 2009, the latest year for which figures have been compiled.

Over 70 per cent of the EU’s money comes from five countries: Germany, France, Italy, Spain and the UK, in that order. But most of the money comes back to them, too. France (with its EU farm subsidies) gets the biggest amount back, followed by Germany, Spain, Italy and Poland (with its farmers and its roads funded by EU development funds).

As the debate gets underway for the next seven-year budget framework, we thought we’d crunch the numbers to establish who the biggest winners and losers are. (Check out the outcomes for all 27 countries in this spreadsheet

Cameron and Barroso last week at Downing Street, where they discussed the EU budget

Amid all the hand-wringing about the Greek parliamentary vote on the key €28b austerity package this afternoon in Athens, the European Commission will meet to give its final assent to its proposed EU budget for the next seven-year cycle, normally the most-watched event on the Brussels agenda.

Much of the outlines of the budget have already been reported on the pages of the FT, but many will be watching the top line: just how much will the Commission, which, as the EU’s executive branch, has the responsibility for kicking off the 18-month negotiations, propose member countries should contribute to Brussels’ budget?

This will be a big question for David Cameron, British prime minister, who has made cutting down on Brussels’ spending the centre of his Europe strategy. For reference sake, after the jump we are re-publishing a letter Cameron got his French and German counterparts to sign calling for an effective freeze on the seven-year budget plan, known as the mutli-annual financial framework in eurocrat-ese. 

Olli Rehn, the European commissioner for economic and monetary affairs

The debate in the Greek parliament has begun, and pressure is building ahead of the key meeting of eurozone finance ministers on Sunday which – in the event of parliament’s passage of a new €28bn austerity plan – will both approve a quick €12bn in aid to Athens and set up the outlines for second Greek bail-out package. 

Draghi meets German chancellor Angela Merkel in Berlin last week

Mario Draghi meets German chancellor Angela Merkel in Berlin last week

UPDATE: Draghi has been confirmed, but not before lots of horse-trading. See our story here.

Day two of the European Union summit is already underway, and among the issues we will be watching closely is the nomination of Mario Draghi to become head of the European Central Bank, which even at this late date appears not entirely a done deal.

As we’ve been reporting for several weeks, France has been grumpy that Draghi’s confirmation will lead to two Italians on the ECB’s executive board and no Frenchman, since the current president, Jean-Claude Trichet, is retiring. Nicolas Sarkozy, the French president, thought he had a deal with Italian prime minister Silvio Berlusconi for the second Italian, Lorenzo Bini Smaghi, to resign.

But Bini Smaghi, citing the ECB’s independence, has resisted political pressure, and is rumoured to be holding out for Draghi’s current job: head of the Bank of Italy. Berlusconi, however, has an alternate candidate in mind and has thus far resisted French pressure. 

UPDATE: The summit has broken up for the evening, and they’ve published the final conclusions on Greece. Only minor tweaks from draft version. Complete statement can be read here.

When the summit of European leaders began this evening, the big hole in the draft conclusions circulated to Brussels diplomats was language on Greece. Brussels Blog has now obtained a copy of that section, and though it contains few surprises, it does raise some key points that are worth highlighting.

First is the pressure they are placing on Antonis Samaras, the Greek opposition leader, to back the €28bn in austerity measures to be voted on next week. Officials say Samaras got a firm lecture from centre-right heads of government this afternoon during a pre-summit caucus in Brussels – and one official said he gave as good as he got.

In the draft conclusions, the leaders are more diplomatic, but still clear: they want cross-party support for the package, despite Samaras’ public declaration that he won’t back it. A critical €12bn aid payment is contingent on passing the package, and Athens will default on its debt if they don’t get the loan by mid-July. The section on the need for broad political backing is after the jump: 

The Socialist group were the first to gather in the traditional pre-summit party huddles, the real start of the festivities here in Brussels. Under a well-worn tradition, EU leaders from the major political groupings meet over lunch to coordinate their positions – and share gossip, one presumes – ahead of the actual leaders’ meeting today and tomorrow.

Well, that’s the idea anyway. In the Socialists’ case, none of their national leaders – including Spain’s José Luis Zapatero and Greece’s George Papandreou – were in attendance at the Albert Hall venue in downtown Brussels.

That left a hodge podge of opposition leaders, ministers, European commissioners, and other lesser-known officials as the only attendees to a pre-summit meeting for a summit to which they are not invited. The only exception was Cathy Ashton, the EU foreign policy supremo, who gets a look in on some of the council debates. 

Over at the largest pre-summit gathering, the centre-right European Peoples’ Party which is meeting across from the Belgian royal palace, the most highly-anticipated arrival was Antonis Samaras, the Greek opposition leader.

Heading into the caucus, Samaras repeated what he said in today’s Financial Times: that although he supports reform efforts, he can’t back the package proposed by the ruling Socialist government. 

Herman Van Rompuy, who as president of the European Council, will chair the summit

Although the eyes of Europe are on Athens, the two-day summit of European heads of government that starts today in Brussels may have little to add to the ongoing debate over what to do about Greece’s debt crisis.

That’s because most of the tough decisions left – particularly how to involve private bondholders in shouldering some of the cost of another Greek bail-out – have been put in the hands of finance ministers, who must hash out their differences before an emergency meeting July 3.

Economic issues will hardly be off the agenda, however, especially tonight. In his letter to European leaders, Herman Van Rompuy, president of the European Council, said tonight’s dinner will be focused on the economy – though largely issues that are not particularly controversial or have been decided by finance ministers.