With the European Commission holding its final summer meeting on Wednesday, Brussels goes on holiday in earnest starting next week, with nothing on the formal EU calendar until a meeting of European affairs ministers in Cyprus on August 29.
But if whispers in the hallways are any indication, veterans of the eurozone crisis remain traumatised by last August, when some inopportune comments by then-Italian prime minister Silvio Berlusconi shook Europe from its summer slumber. Indeed, Maria Fekter, Austria’s gabby finance minister, has already speculated on the need for an emergency August summit.
Herewith, the Brussels Blog posts its completely unscientific odds on which of the eurozone’s smouldering crisis embers could reignite into an out-of-control summer wildfire, forcing cancelled hotel bookings and return trips to Zaventem. Read more
Jailed opposition leader Yulia Tymoshenko showing what she called a bruise on her forearm
Anyone hoping that the ongoing standoff between the EU and Ukraine over the detention of one-time Orange Revolution leader Yulia Tymoshenko will end soon is likely to be disappointed. With national elections just three months away, there seems to be no interest in Kiev in releasing her during campaign season.
Kostyantyn Gryshchenko, Ukraine’s foreign minister, acknowledged to Brussels Blog that the former prime minister had become more of a problem for his government in jail than free, noting her imprisonment has made an “association agreement” with EU almost impossible to finalise. “We [see] this issue as a certain irritant which obviously is not helping to move ahead with a positive agenda with the European Union,” Gryshchenko said.
But Gryshchenko swiftly repeated the line that other senior Ukrainian officials have made about the Tymoshenko case: there was little he could do to overturn last year’s court ruling that sentenced the former prime minister to seven years in prison for abuse of office. Read more
Spain's Mendez de Vigo, right, with his Danish counterpart at a Brussels meeting in May.
An otherwise uneventful meeting of 27 European ministers in Brussels was upended Tuesday when Inigo Méndez de Vigo, Spain’s EU minister, issued a statement saying Madrid, Rome and Paris all agreed countries were not doing enough to implement eurozone crisis decisions taken at last month’s high-stakes summit.
The statement (see it here, in Spanish) appeared to be a coordinated attack on Germany, where senior officials have spent weeks sending conflicting messages on what, exactly, was agreed at the summit and when decisions will be implemented – a big deal for Spain, since the measures could eventually mean the eurozone and not the Spanish government will be liable for debt incurred during Spain’s bank bailout.
One problem: there was no three-country agreement. And now Rome and Paris are running away from Méndez de Vigo’s statement as fast as they can. Read more
Ireland's Enda Kenny, right, with German counterpart Angela Merkel at the EU summit.
It’s been a good week for Ireland.
Not only has last week’s EU summit deal on bank recaptalisation pushed benchmark borrowing rates down to pre-bailout levels (today they were trending down again, to 6.2 per cent, lower than even Spain’s). But it has also enabled Dublin to venture out on the open market for the first time in two years: tomorrow, it will sell €500m in 3-year bills. Small, but a highly-symbolic turning point nonetheless.
Despite the positive market reaction, there is a decent amount of debate in the hallways in Brussels about what, exactly, the deal means for Ireland. As a reminder, eurozone officials agreed to change the rules of future bank bailouts so that the €500bn eurozone rescue fund can inject cash right into struggling banks, something specifically intended for Spain’s upcoming €100bn EU bank rescue.
When Ireland was bailed out, all such money had to be funnelled through the state, meaning it added to Dublin’s ballooning national debt. During the late-night negotiations, Irish officials – aided by backing from the European Central Bank’s Jörg Asmussen and Klaus Regling, head of the bailout fund – were able to insert language saying Ireland would be considered for similar treatment.
Since Ireland has spent about €64bn on shoring up its collapsed banking system, and its overall debt level now stands at about €185bn, moving those debts off its books would surely be the “game changer” touted by Enda Kenny, the Irish prime minster. But how much of that debt could realistically be moved off Dublin’s books? Read more