Here we go again. The protesters are back in Syntagma square. The EU’s summer has officially begun.

Yesterday’s anger was easy to explain. Shortly after midnight, the Greek parliament voted through contentious pension cuts and income tax increases, covering the bulk of a €5.4bn package of austerity measures demanded by creditors. That sets the scene for a meeting of the Eurogroup today to decide how much more the Greeks still need to do.

The Greek parliamentarians already appear to have been shaving close to their own jugulars. Kerin Hope, the FT’s correspondent in Athens, notes that riot police had to block the entrance to the assembly after members of Poesy, their own union, tried to force their way past security guards.

But despite the successful vote, Greece is far from in the clear. Before closing a review of Greece’s bailout and providing Athens much-needed aid, the IMF and the German government are insisting Athens go a step further an legislate an additional €3bn in “contingency measures” in case the agreed cuts prove insufficient to meet budget surplus targets. Read more

Peter Spiegel

Monday was supposed to be the day when eurozone finance ministers flew to Brussels for an emergency eurogroup meeting (just their first of 2016!) to agree a way forward on Greece’s star-crossed €86n third bailout. But despite weeks of intensive talks, negotiators are no closer to a deal then they were when they were sent back to Athens two months ago.

Last night, Christine Lagarde, the International Monetary Fund chief, sent a letter to all 19 finance ministers ahead of the Monday meeting with her demands: drop all the talk about new austerity measures and quickly agree a plan for debt relief so that a deal can be met before a possible Greek default in July. We got a hold of the letter, and have posted a news story on its contents here. But as is our practice at the Brussels Blog, we thought we’d offer up an annotated version of the full text, sent to national capitals last night:

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The three EU chieftains– Jean-Claude Juncker, Donald Tusk, and Martin Schulz – swapped the corridors of power in Brussels for the halls of Rome’s Capitoline Museums on Thursday night, but the magnificent setting only seemed to deepen their gloom about the state of European integration.

The trio was in the Italian capital ahead of Friday’s ceremony to deliver the prestigious Charlemagne award to Pope Francis at the Vatican. But first they had to debate the future of Europe at a time when it appears to be in serious jeopardy amid the rise of populism, weak economic growth, and, the migration crisisRead more

Peter Spiegel

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Just 24 hours after Frans Timmermans, the European Commission vice-president who has overseen the EU’s response to the refugee crisis, confidently announced in Brussels that he was recommending Turks be granted visa-free travel to Europe, the Turkish politician who had won that very concession held a similar press conference 2,500km away to announce he was resigning.

The proximate cause of Ahmet Davutoglu’s departure as Turkey’s prime minister was his increasingly strained relationship with Recep Tayyip Erdogan, the powerful president who found his hand-picked prime minister to be far less pliable than originally hoped. But EU officials are worried that Mr Davutoglu’s outreach to Europe was a contributing factor. Ankara has been buzzing about a new political blog that began attacking Mr Davutoglu earlier this week, accusing him of “collaborating with the West” and betraying Mr Erdogan by striking deals with the EU. Many believe Mr Erdogan himself gave the green light for the blog’s accusations. Turkish officials said the president was seething after Mr Davutoglu was pictured chummily touring refugee camps with Germany’s Angela Merkel and other EU leaders two weeks ago in the border city of Gaziantep. Read more

Peter Spiegel

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Jeremy Corbyn, leader of Britain's Labour party

Local and regional elections in Europe normally provide minor diversions for the political classes in between the titanic national clashes that pit a country’s most prominent leaders against each other. But over the last six months, it has been a series of regional votes that have sent shockwaves through some of the EU’s most well-established parties and reshaped national debates. In December, the far-right National Front finished first in six of France’s 13 major regions in the first round of voting, and was only denied victory in the second round when the ruling Socialists pulled out of multiple contests. Three months later, the equally anti-immigrant Alternative für Deutschland scored in double digits in three German länder elections, including a stunning 24 per cent in depressed Saxony-Anhalt, rattling the ruling Christian Democrats of Chancellor Angela Merkel.

Today, it is Britain’s turn to hold local contests, and while the populist UK Independence party is hoping to score gains outside its English base, the real potential for electoral mayhem lies within opposition Labour, which is in the midst of a brutal internecine war over the leadership of left-leading party boss Jeremy Corbyn. In the most high-profile vote today, a Labour candidate is expected to emerge victorious: one-time Corbyn ally Sadiq Khan is heavily favoured to succeed Tory Boris Johnson as London’s next mayor. But Labour risks losing seats almost everywhere else in the UK, including in Scotland, where the once-dominant party is at risk of slipping into third behind the commanding Scottish National party and the revived Conservatives. Read more

Peter Spiegel

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EU economic chief Pierre Moscovici, right, with Portugal's new finance minister in Lisbon

There’s been a rare spate of good economic news for the eurozone recently, with Eurostat announcing last week that the currency union’s gross domestic product had finally returned to pre-crisis levels and was growing at a 0.6 per cent quarterly clip – enough to outpace the US or the UK so far this year. But growth remains uneven across the 19-member bloc, and the first quarter’s performance remains meagre by historical standards. As a result, it will likely not be enough to help eurozone countries currently finding it difficult to get their debt and deficit levels back under EU budget ceilings.

Those countries sparring with Brussels over such budget targets – France, Italy, Spain and Portugal – will be in the spotlight today when the European Commission issues its new economic forecasts, which will include predictions on whether any of them are making progress towards getting their deficits below the 3 per cent of GDP threshold or – in the case of Italy, which is already below the deficit ceiling – are cutting their debt piles fast enough.

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Another big Brussels week on migration is upon us. The flow of migrant boats to Greek islands has almost stopped, but Brussels is only in the foothills of the political trek to make the Turkey deal stick and the EU asylum system work properly. The European Commission will try to chivvy the pace on Wednesday with three contentious initiatives on visas, borders and asylum rules.

1. An overhaul of the Dublin asylum system

This revamp of the EU’s asylum rules is well-flagged but still hot politics. A Commission discussion paper last month raised two main reform options – and we understand the final proposal will be a blend of the two. So the first EU country an asylum seeker enters would still handle their claim (a crucial Dublin principle for immigration-wary northern states and the UK). But if a frontline state receives 150 per cent more claims than its set asylum capacity, a quota system automatically kicks in to distribute migrants around Europe (which is more to the liking of Greece and Italy). It is a halfway house that leaves plenty for EU states to fight about. There is perhaps even some fodder for Brexit campaigners (the question of whether Britain can stay in Dublin but remain exempt from automatic burden sharing will not be answered in the proposal). Read more

Peter Spiegel

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Labour's Ken Livingstone is swarmed by reporters after a BBC appearance on Thursday.

Even by the savage standards of British political combat, the scenes that played out in central London yesterday were extraordinary. John Mann, a longstanding Labour MP, tracked down former London mayor and left-wing Labour stalwart Ken Livingstone to accuse him of being a “disgusting racist” and “Nazi apologist”, a confrontation captured by cameras from, among others, Channel 4 news and the BBC’s political correspondent Vicki Young. Just an hour later, Mr Livingstone was suspended from Labour, a party which he joined nearly 50 years ago.

The scrap was just the latest in a bitter internecine war over senior party members making remarks which many consider overtly anti-Semitic. The Mann-Livingstone feud was sparked by the previous day’s suspension of yet another Labour MP, Naz Shah,after two-year-old social media posts surfaced where Ms Shah endorsed a “Solution for the Israel-Palestine Conflict” that would “relocate” Jews from Israel to the US, touting a minimal “transportation cost”. Mr Livingstone went on BBC radio yesterday morning to defend Ms Shah, arguing she was the victim of the “Israeli lobby” and that her comments were “over the top” but not anti-Semitic. “Let’s remember when Hitler won his election in 1932 his policy then was that Jews should be moved to Israel,” Mr Livingstone continued. “He was supporting Zionism before he went mad and ended up killing six million Jews.” Mr Mann angrily shouted that those remarks amounted to “rewriting history”. Read more

Peter Spiegel

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Enda Kenny, Irish prime minister, campaigning ahead of February's general election.

For most of the last two months, Enda Kenny appeared to be on the verge of becoming the latest political casualty of the eurozone crisis. After leading Ireland through a brutal three-year bailout, Mr Kenny saw his Fine Gael party drop more than 10 percentage points in February’s general election, meaning his coalition with the Labour party no longer had enough seats to return to government. A grand coalition with historic rival Fianna Fáil seemed out of the question, and it would be hard to survive as Fine Gael leader if the country was forced into another elections.

But now Mr Kenny is on the verge of returning as Taoiseach (Irish for prime minister) after all, striking an uneasy peace with Fianna Fáil that would allow him to head a minority government with some independent allies. If he succeeds, it would be a first in the bailout era: Portugal’s prime minister lost his job in elections last year, and Greece has seen two different prime ministers ushered out of office after two successive bailouts. Spain’s Mariano Rajoy, the only other bailout premier to face the voters, is headed back to new elections after failing to cobble together a coalition. Read more

Peter Spiegel

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Dijsselbloem, in orange tie, with his Finnish, Belgian and Spanish counterparts last week

Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his 18 eurozone counterparts, had threatened to bring his eurogroup back to Brussels tomorrow for this year’s first unscheduled meeting on Greece – but only if bailout negotiators agreed on a new set of austerity measures with Athens beforehand. Last night, Mr Dijsselbloem announced that more time was needed to reach a deal, raising the risk that Greece’s bailout standoff could once again be headed for a period of bitter brinkmanship.

Many signs of a repeat of last year’s Grexit drama are present: irreconcilable differences between Athens and its bailout creditors; a looming July debt payment owed to the European Central Bank; angry denunciations by embattled Greek prime minister Alexis Tsipras. The risk of a rerun was underlined by reports last night that Mr Tsipras was due to call Donald Tusk, the European Council president, this morning and demand a special summit of eurozone leaders to hash out a way forward.

It’s unlikely eurozone heads of government will want to take up the Greek crisis right now, with a drop-dead deadline still months away and the prospect of another eurogroup meeting looming as early as next week. But differences between the major players in the Greek drama remain deep, and a deal among mid-level negotiators remain stuck on two primary issues:

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Peter Spiegel

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King Felipe, left, meets with Mariano Rajoy during coalition negotiations earlier this year

It’s been four months since Spanish voters went to the polls and delivered a result so inconclusive that most political observers – including incumbent prime minister Mariano Rajoy himself – have been predicting another round of elections almost since the results were first counted. Unless King Felipe can pull a rabbit out of the hat today when he meets the heads of the four largest parties for a final time, Spaniards are likely to head to the polls again on June 26 to have another try.

Would another election change anything? Recent opinion polls show that Mr Rajoy’s centre-right Popular party may gain a little more than the 28.7 per cent it won in December, and the second-place Socialists would lose a bit on their 22 per cent take. But the numbers have held pretty steady throughout the four-month drama. Which would suggest that the parties should hunker down and find a coalition that works rather than risk a repeat. But several hurdles have prevented any agreement, particularly within the Socialists and the far-left Podemos insurgent party.

The Socialists have resisted Mr Rajoy’s repeated entreaties to form a grand coalition, and one only need to look at what happened to the centre-left Pasok party in Greece to understand why: joining in a grand coalition in Athens led by the centre-right allowed far-left Syriza to claim the mantle of the left from Pasok, and the Spanish Socialists are deathly afraid of Podemos repeating the feat in Madrid. But Podemos has been equally resistant, blowing up the only long-shot coalition attempt that was seriously tried during the talks – a Socialist-led government with Podemos and the upstart centrist Ciudadanos party joining in – when its membership voted overwhelmingly to reject it earlier this month. Read more

Jim Brunsden

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Merkel, right, with Turkish premier Ahmet Davutoglu at a refugee camp in Gaziantep

Part of the job description of any political leader is to do your best to make it look like you get along with people who you actually can’t stand. But when does that willingness to grin and bear it boomerang and make a leader look weak for not standing up for his or her principles?

German Chancellor Angela Merkel’s lightning visit to the Turko-Syrian border on Saturday, where she roundly praised Turkey’s willingness to take in millions of Syrian refugees, was just the latest example of the effort she is prepared to make to sustain the EU’s fragile deal with Ankara on returning asylum seekers from Greece. Her problem is that, try as she might, Turkey’s president, Recep Tayyip Erdogan, is going out of his way to make it as hard as possible to be nice to him.

The heart of the problem is Mr Erdogan’s hair trigger when it comes to feeling insulted, slighted or provoked. From the beginning, Ms Merkel has had to deal with manifold criticisms from human rights groups about the refugee plan and doubts over Turkey’s status as a safe country to send people back to from Greece. But repeated rows pitting Mr Erdogan’s tendency to take legal or diplomatic action against critics versus the EU’s fundamental principle of free expression are threatening to overshadow the refugee crisis itself. Read more

Peter Spiegel

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Barack Obama arrived last night in the British capital, where he is expected to give his full-throated support for the UK to remain in the EU – an intervention that is as highly anticipated as it is fraught with political danger. There is no set-piece speech the White House has engineered; instead, the US president has offered up an op-ed in today’s Daily Telegraph, and administration officials say he will speak “as a friend” if he is asked about the issue during his two-day stay. Which is something of a foregone conclusion, particularly with a Downing Street press conference set for this afternoon. Read more

Jim Brunsden

Wolfgang Schäuble’s destiny is to be a man who keeps having to listen to people talking about things he doesn’t want to hear about.

Germany’s finance minister, together with his counterparts from around Europe, will gather in Amsterdam on Friday to discuss, among other things, the future of the Banking Union — the major policy push undertaken by the euro area over the last few years to centralIze how it oversees its banks.

But like a band with growing musical differences, ministers can’t agree on what the next steps of the project should be, with Mr Schäuble playing the role of the blues purist who wants the group to move away from grand concepts and get back to basics.

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Peter Spiegel

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There has been no shortage of reasons for outrage over last month’s refugee return deal between the EU and Turkey that, for now, has slowed the influx of migrants into Greece to a trickle. The UN believes the expulsion of migrants arriving in Greece may be illegal under international law. Human Rights Watch yesterday found the deportations “riddled with abuse”. Others have been more upset about the sweeteners given to Ankara in exchange for its cooperation in the crackdown, including €6bn in new aid and the unfreezing of negotiations over Turkish membership in the EU – which nearly upended Cypriot reunification talks and has given Brexiteers a new tool to scare UK voters.

But there may not be an issue as politically sensitive as the EU concession to provide Turkish nationals visa-free travel in Europe as early as June. Yesterday Dimitris Avramopoulos, the EU’s migration commissioner, said Brussels will issue a progress report on May 4 outlining how far Ankara has gone in meeting 72 benchmarks required before the short-term visits can be allowed. “No visa liberalisation can be offered if all benchmarks are not met,” he intoned at a midday news conference.

There is increasing nervousness in several EU capitals, including Paris and Rome, that Turkey may actually clear those hurdles – or, if they’re close, the European Commission will give Ankara a pass and force national governments to decide what to do about the visa deal. That would be awkward for domestic politics in several EU countries; critics are already complaining that a refugee crisis that has caused an anti-immigrant backlash in some quarters because of the high number of Muslims arriving in Europe will have to be solved with a Turkey deal that will allow even more Muslims to travel to Europe. Some governments have begun looking at measures that would allow them to hedge their promise to Ankara, including safeguard clauses, extra conditions or watered down terms. But Ahmed Davutoglu this week made it clear: if there’s no visa-free travel deal, “no one can expect Turkey to adhere to its commitments.” Read more

Peter Spiegel

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Draghi, left, and Schäuble, bottom right, at the IMF spring meetings in Washington last week

The European Central Bank holds its monthly monetary policy meeting tomorrow amid one of the most overheated political environments for Mario Draghi and his fellow governors since the height of the eurozone crisis. And despite the German government’s long-stated insistence that central banks should jealously guard their independence and not be pressured by elected officials into making decisions that are politically expedient, the most pointed criticism is coming from Berlin.

The most surprising broadside came nearly two weeks ago from Wolfgang Schäuble, the German finance minister, who publicly claimed to have told Mr Draghi that his loose money policy was to blame for about 50 per cent of the votes received by the ascendant anti-immigrant Alternative for Germany party in last month’s regional elections. Mr Schäuble also called on the US, UK and the eurozone to band together in pressuring their central banks to “carefully but slowly exit” their economic stimulus policies. Hardly the model of respecting central bank independence.

Mr Schäuble’s remarks appear to have opened the floodgates. Hans-Peter Friedrich, a former interior minister in Chancellor Angela Merkel’s government and a member of the Bavarian sister party of her governing Christian Democrats, told the mass-market Bild tabloid at the weekend that Mr Draghi’s replacement “must be German” and respect the Bundesbank’s tradition of “monetary stability”. Axel Weber, the former Bundesbank chief who nearly beat Mr Draghi out for the top ECB job in 2011 before resigning, told the Wall Street Journal this week that more monetary easing would be counterproductiveRead more

Jim Brunsden

Meeting room in the Dutch maritime museum where finance ministers will gather on Friday

Coming to terms with painful truths can take a long time, and the EU’s struggle to acknowledge an original sin built into its banking regulations is a case in point.

It’s a problem that dates back decades, and that finance ministers are going to tentatively grapple with at an informal meeting in Amsterdam this week. It centres on the regulatory treatment of sovereign debt, and we’ve got our hands on the options paper prepared for ministers by the Dutch presidency and posted it here.

While the subject may sound arcane, it’s extremely politically charged. The latest ructions over how to treat bank holdings in government debt are fanning the already hot flames of discord between Rome and Berlin, with Brussels as ever squeezed uncomfortably in the middle.

So what’s the problem? The EU has highly detailed legislation covering different aspects of banks’ activities, in order to ensure that institutions have enough financial reserves to cope with the risks that they are taking with their investments.

The rules cover everything from mortgage lending to complex trading in derivatives, but they have one glaring loophole, namely that many of the normal requirements, such as capital rules and exposure limits, don’t apply to banks’ purchases of European governments’ own debt. Read more

Peter Spiegel

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The list of big American tech companies being investigated by Margrethe Vestager, the EU’s competition chief, for either antitrust violations or sweetheart tax deals already reads like a “who’s who” of Silicon Valley: Google, Amazon, Apple. Her proclivity for going after US companies, particularly in her tax investigations (American non-tech groups like McDonald’s and Starbucks have also been targeted), has already raised eyebrows in Washington, where Treasury officials and members of Congress have accused her of an anti-American bias.

Ms Vestager has denied singling out US firms, and if she is at all chastened by the American criticism, she’s not showing it: as early as tomorrow, she is expected to roll out a second antitrust case against Google, this time accusing the California company of abusing its dominant position in smartphone operating systems to foist its suite of apps on unsuspecting consumers.

In a speech yesterday, the former Danish economy minister compared Google’s practices to the mother of all EU-US tech antitrust cases, the 1990s-era battle with Microsoft. The comparison is apt for two reasons. First is for the reason Ms Vestager intended: during the time when computing was dominated by PCs, desktops running Microsoft’s ubiquitous Windows operating systems would come “bundled” with a wide range of other Microsoft software, most importantly its Explorer internet browser. Such bundling gradually destroyed browser inventor (and onetime market leader) Netscape, since nobody needed its Navigator browser if your PC came with Explorer. Read more

Duncan Robinson

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Pope Francis meets with refugees on the Greek island of Lesbos during a visit on Saturday

Which European country has received the most asylum seekers on a per capita basis so far this year? Germany? No. Sweden? No. Hungary? No. After this weekend, it is actually the Vatican. Aided by a low official population of 450, the Vatican shot to the top of the leaderboard when it comes to housing refugees after Pope Francis returned from his trip to Lesbos with 12 Syrians in tow.

The gesture was token and humanitarian rather than political — or so the Vatican’s spinners insisted. But it provided an ugly juxtaposition for German Chancellor Angela Merkel, who spent the weekend fending off criticism at home after giving the go ahead for a criminal investigation into a comedian who made jokes at the expense of Turkish president Recep Tayyip Erdoğan.

The footage of a pope embracing asylum seekers who fled war only to face months of detention in Greece and then a legally questionable return across the Aegean provided the grimmest reminder yet of the moral price that the EU has paid for the Merkel-led deal with Turkey. Read more

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Will Sunday's referendum help or hurt Beppe Grillo, right, leader of the FIve Star Movement?

Referendums in Europe are often a blunt weapon against the establishment. Italians will be voting in one on Sunday and, of course, it could end badly for Matteo Renzi, the country’s restless centre-left premier. But more likely the result will buck the trend. Indeed this referendum may actually turn the tables and leave the anti-establishment Five Star Movement licking its wounds.

The issue is slightly obscure – oil and gas drilling rights – and the politics is far from straightforward. As the FT’s James Politi explains, Italians will vote on whether to stop renewing offshore licenses for facilities within 12 miles of the coast. The latest polls show the pro-ban environmentalists will win handsomely. But the critical question is whether they will come near the 50 per cent turnout threshold. That is where the real politics comes in.

Mr Renzi is firmly on the side of indifference. He says the referendum is a waste of time and has urged voters to not to bother. In an interview today with La Repubblica he calls it “a hoax”. This all conveniently helps him hedge his position and avoid looking too friendly with Big Oil and Italy’s energy giant Eni. More importantly, it also puts Italy’s leading populist party, the Five Star Movement, to the test.  Read more