Monthly Archives: February 2014

A slide from a January 2014 investor presentation by the Ukrainian finance ministry

First of all, just how much financial trouble is Ukraine in?

Almost all major economic powers were out on Monday saying that any aid package would have to wait for a full International Monetary Fund programme. But such “stand-by arrangements” can take months to negotiate – and IMF officials have made clear they want a new government firmly in place before those negotiations can begin, so that may mean we’re waiting until after May’s presidential elections.

So will Ukraine make it until then? Analysts are dubious, and the Ukrainian finance ministry’s declaration on Monday that they are seeking bilateral loans from the US and Poland in the next week or two certainly implies that they’re not sure they can make it that long either.

One key metric to watch is Ukraine’s foreign currency reserves, which for those not seeped in international finance is about as close to a national bank account for emerging market economies as you can get. If Ukraine runs out of reserves of dollars, it can’t pay any of its bills to foreign creditors – such as bondholders or gas providers – and essentially goes broke. Read more

Barroso, right, meets with UK prime minister David Cameron at Downing Street last year.

José Manuel Barroso, the president of the European Commission, caused quite a kerfuffle in London at the weekend when he said on one of Britain’s most-watched political chat shows that Scotland would find it “extremely difficult, if not impossible” to rejoin the EU if it were to secede from the UK.

But for those who have been following the debate closely, Barroso’s position had been telegraphed long before – in fact, it has been the stated European Commission view for nearly a decade.

In 2004, then-Commission president Romano Prodi, in a statement published in the Official Journal of the European Union – where all laws and decisions must be published before they can take legal effect – made clear that any region that decided to declare independence must reapply for EU membership and face the same kind of unanimous agreement as any other applicant: Read more

Workers shutter a branch of Laiki Bank, which was closed under Cyprus' €10bn bailout last year

For those not following every twist and turn in the EU’s debate over how to bail out failing banks, it may come as a bit of a surprise that finance ministers are still fighting over who pays for a collapsed financial institution given the deal struck in December on this very issue.

But a three-page “issues note” sent to national capitals this week ahead of EU finance ministers’ meetings on Monday and Tuesday – obtained by Brussels Blog and posted here – makes clear that there are still a lot of unanswered questions about a new EU-wide bank rescue fund to pay for such bailouts. And it’s perhaps no surprise that most of the unanswered questions centre around one thing: money. Read more

Do last week’s German constitutional court ruling lambasting – but failing to overturn – the European Central Bank’s crisis-fighting bond-buying programme and today’s political upheaval in Italy have anything in common?

In the view of many ECB critics, particularly in Berlin, the two are not only related, but one may have caused the other. Read more

EU commissioner Neelie Kroes

Neelie Kroes has built up a formidable reputation over four decades in politics – from privatising Dutch state telecom and postal services in the 1980s, to slapping a record $1.4bn fine on Microsoft as the EU’s anti-trust chief in 2008, to liberalising Europe’s fragmented telecoms market.

So when she announced her ambition to “reform and globalise how the internet is run” on Wednesday, some feared a power grab of audacious proportions.

Was the formidable Ms Kroes seeking to take on the management of the internet itself? Had the Commissioner’s ambitious instincts finally gotten the better of her?

The true scale of Ms Kroes’ ambitions are far more modest – by seeking to wrest some control from the US over the regulation of key web functions, such as top level domain name registration and the routing of web traffic, the Commission is seeking a small but significant role in managing the nuts and bolts of the internet. Read more

Jean-Claude Trichet, right, with the parliament's economic committee chair, Sharon Bowles

The troika of bailout lenders has not been getting much love at the European Parliament’s ongoing inquiry into its activities in recent weeks. But the criticism is not just coming from MEPs in the throes of election fever. Predictions of the troika’s demise have come from some unexpected quarters, including current and former members of the European Central Bank executive board.

During the hearings, MEPs have particularly criticised the troika — made up of the International Monetary Fund, European Commission and the ECB — for its overly optimistic growth forecasts for bailout countries, which have been repeatedly revised downwards. Perhaps unsurprisingly, they have also suggested that the troika be subject to greater parliamentary oversight.

Hannes Swoboda, the Austrian social democrat who heads the centre-left caucus in the parliament, went further, saying the body is undemocratic, hostile to social rights and that the EU would be better off without it. Read more

EU foreign policy chief Catherine Ashton, left, with Ukrainian opposition leaders in Kiev last week

One of the lingering questions left after Ukraine’s failure to sign its long-negotiated integration treaty with the EU at a November summit in Vilnius – setting off months of protests in Kiev – is whether more needs to be offered to former Soviet republics than the current “Eastern Partnership”, which promises “association” but not future membership with the EU.

A Swedish-led effort to restart that conversation will be discussed at Monday’s meeting of EU foreign ministers, according to a “restricted distribution” document handed out to all 28 capitals ahead of the gathering. According to the “non-paper” – which Brussels Blog has posted here – 12 countries have signed onto the Swedish initiative, most of them former Soviet-bloc EU members, but also the UK and Germany.

Among other things, the paper, titled “20 points on the Eastern Partnership post-Vilnius”, argues quick signatures of treaties with Georgia and Moldova, the only two remaining after Ukraine and Armenia reneged at the last minute. Read more