Belgian strikers demonstrate in Brussels earlier this month to protest new austerity measures.
Herman Van Rompuy, the European Council president, announced overnight (via his now customary way of communicating to the press: Twitter) that he will hold a previously-unscheduled summit of all 27 presidents and prime ministers on January 30.
The gathering is expected to deal with the new intergovernmental treaty to enshrine tough budget rules that leaders hope will be completed by the end of the month — though with a huge amount of eurozone debt coming due in January, the gathering could yet transform into another crisis summit. Diplomats say its likely to start around lunchtime.
One slight problem with that, however. Belgian media is reporting this morning that local unions have announced an event of their own for January 30: a general strike to protest new austerity measures announced by the just-formed government of prime minister Elio Di Rupo. Their ire is focused on proposed changes in pension laws that would force delays in early retirement. Read more
Uwe Corsepius, EU Council's secretary general
UPDATE: According to a British official, the UK has today been invited to participate in the treaty negotiations, a significant shift that will allow London to weigh in on some of the most sensitive issues to be discussed, including whether EU institutions will enforce the new pact.
Senior officials from European national finance ministries chatted last night in the first informal negotiations on the highly-touted new intergovernmental treaty to govern the region’s economic policy, though diplomats say little substance was discussed.
Ahead of the talks, however, Uwe Corsepius, the new secretary general of the European Council, sent out a four-page letter to negotiators in an attempt to set a roadmap for how the talks will proceed – and we at Brussels Blog got our mitts on it.
Significantly, Corsepius writes that he wants negotiations completed by the end of January “so as to allow the signature of the agreement at the beginning of March”. Officials said this is why a new informal EU summit is tentatively scheduled for early February. A first draft of the treaty text could be done by tomorrow, or early next week at the latest. Read more
Finland's Jyrki Katainen, France's Nicolas Sarkozy, Germany's Angela Merkel and EU Commission's José Manuel Barroso at last week's summit.
This morning, we are fronting our newspaper with a story led by fellow Brussels Blogger Joshua Chaffin about the growing problems in multiple European capitals — not just London — with the nascent economic convergence treaty agreed to at last week’s summit.
That story was written with a lot of help from our network of correspondents across Europe, and given space constraints in the dead-tree version of our report, we weren’t able to go into all the detailed accounts we got from our FT colleagues. Here on the blog, we thought we’d provide a more in-depth taste of the potential hiccups ahead. Read more
For the unfortunate diplomats locked in the Justus Lipsius council building all of Friday and into Saturday morning, the European Union’s 2012 budget negotiations were an arduous affair. Upon emerging, one groggy diplomat lamented “an evening I can never get back.”
But to the union at large, the remarkable thing about the talks was how easily they went down.
For those who missed the news early Saturday morning, representatives from the EU’s 27 member states, the European parliament and the European commission agreed on a 2.02 per cent increase in next year’s budget, bringing it to €129bn.
That was well below the 5.23 per cent sought by MEPs, and the 4.9 per cent recommended by the commission. Read more
German chancellor Angela Merkel during a press conference Thursday
Our friends and rivals over at The Daily Telegraph have gotten their hands on an interesting document from the German government detailing its proposals for EU treaty change, and have helpfully posted it online (with an English translation by the Open Europe think thank).
Although the Telegraph focuses on its implications for Britain, there is a significant amount of detail on how Berlin would like to change eurozone economic governance, including yet another stab at enshrining bondholder “haircuts” in the EU treaties.
For those who haven’t followed the debate closely, there is now a closed-door fight going on about whether Greece really will be the only country that sees its bondholders pushed into losses – as the eurozone’s leaders have repeatedly insisted in their summit conclusions – or whether the bloc’s new €500bn rescue fund, which could come into place as early as next year, should allow for organised defaults.
Although almost all EU institutions – including the European Commission and European Central Bank – want to make explicit Greece was a one-off, the German paper makes clear they want to keep the door open. Read more
Silvio Berlusconi, the Italian prime minister, at last week's G20 summit in Cannes
At the European Commission’s regular mid-day press briefing today, Amadeu Altafaj-Tardio, the spokesman for economic issues, said the Commission’s Italian monitoring team is expected to arrive this week. After agreement Friday in Cannes, the International Monetary Fund will be sending its own team at the end of the month. Read more
Anti-austerity protesters in Athens hold up a Greek flag that says "not for sale" on Friday.
Thanks to some help from the European Commission, we have a bit more clarity on where European leaders will be spending the new €130bn in Greek bail-out aid. But the new data we received makes all the more clear that a huge amount is dependant on the still-to-be negotiated details of the 50 per cent Greek bondholder haircut deal, which may not be completed until the end of the year.
Just to remind readers where the confusion lies, of the €130bn in new funding, only €30bn was officially earmarked in last week’s summit communiqué – and that money will go for “sweeteners” to current bondholders so they’ll participate in a bond-swap programme. If they are going to take a 50 per cent cut in the face value of their bonds, they insisted on getting something else in return, and this was the price.
Of the remaining €100bn, fully €30bn will go to bank recapitalisations, not then €20bn we assumed last week. Although EU banking authorities have called for €30bn in new capital for Greek banks, officials tell us this is in addition to the €10bn provided in the first €110bn Greek bail-out.
Which leaves us with only €70bn to actually run the Greek government for the next three years. How did European authorities come to this number? That requires even more detective work, after the jump. Read more
Greek prime minister George Papandreou, right, with his counterparts at Wednesday's summit
Thursday’s early-morning deal on a new €130bn Greek bail-out is different in magnitude and in kind from the July €109bn programme it replaces, but in one respect they’re very similar – European officials have had a hard time explaining what, exactly, the money is for.
The one thing they have announced is that €30bn of it will go to so-called “sweeteners” to convince Greek bondholders to accept 50 per cent haircuts on the face value of their bonds.
How this would work has yet to be negotiated, but in the July plan, such sweeteners were used to create a collateral pool for new, gold-plated Greek bonds that could be used in a bond swap programme. In order to convince bondholders to trade in their current bonds that are about to come due for new bonds that don’t come due for 30 years, these new bonds needed to be extra safe. The collateral “sweeteners” were the means to do that.
How is the remaining €100bn in the new €130bn Greek bail-out going to be spent? A little detective work after the jump. Read more