In today’s dead-tree version of the FT, we have a front-page story on an eight-page “draft guidelines for the conclusions” for this month’s EU summit, a document that includes some bold new ideas, like requiring eurozone countries to sign “individual contractual arrangements” with Brussels on their economic reform plans.
We thought we’d post the document (see it here) for Brussels Blog readers to get a fuller view. The parts we found most interesting begin on page 7. Senior officials caution the draft is being used to stimulate debate so that Herman Van Rompuy, the European Council president, can come up with a more concrete consensus heading into the summit about what can be achieved.
Indeed, the cover sheet of the draft calls it a “state of progress regarding the various topics on the agenda”; still, since it was cobbled together after Van Rompuy’s series of meetings with eurozone leaders over the past month, it reflects the thinking of a lot of national leaders, particularly in the bloc’s largest countries. Read more
Herman Van Rompuy, president of the European Council and chair of all EU summits
For anyone reading the tea leaves ahead of a major EU summit, early drafts of the final communiqué are always essential reading – not necessarily for what’s in them, but for what’s not.
The latest version obtained by the Brussels Blog – the second iteration ahead of next week’s increasingly high-stakes gathering in Brussels (which we’ve posted here) – has quite a few items listed as “p.m.”, an abbreviation for pour mémoire, which loosely translated means “to be added later”. It’s those items where the real debate still rages, and where all eyes will be focused.
The most important p.m. is in the very first section of the 11-page draft: the so-called “report on EMU”, which is the highly-anticipated treatise being drafted by Herman Van Rompuy, the summit chair, with input from José Manuel Barroso, president of the European Commission; Mario Draghi, head of the European Central Bank; and Jean-Claude Juncker, chair of the eurogroup of eurozone finance ministers. Read more
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.
Date of the next informal European Council set to 30 Jan. 2012. Watch my video message @ http://t.co/KFD3w3cC
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
Herman Van Rompuy, left, with President Barack Obama at last week's EU-US summit.
Fellow Brussels Blogger Josh Chaffin has a scoop in this morning’s paper on the five-page “interim report” on EU treaty changes for this week’s summit written by Herman Van Rompuy, the European Council president, which we were able to get our hands on yesterday.
Our story focuses on what is likely to be the central element debated about the report – the suddenly fashionable proposal to do a quick-and-dirty, limited treaty change through the hitherto obscure Protocol 12 of the EU treaties, which is described on page 3 of the Van Rompuy document, which Brussels Blog loyalists can read here.
But there’s much more to digest in the report, and as is our practice, we thought we’d give a more extended evaluation here on the Blog. 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
Juncker, left, heads Eurogroup of 17 euro finance ministers. Rostowski, right, the Ecofin of all 27.
UPDATE 2: The Polish presidency has just made the official announcement. They say the cancellation allows heads of government to decide the things finance ministers were originally going to tackle. Despite negative market reaction to the news, several EU diplomats insist this is a diplomatic miscue by the Poles rather than a sign of things to come.
UPDATE: European diplomat confirms meeting of 27 EU finance ministers has been cancelled.
It’s getting uncomfortably close to crunch time for eurozone leaders, with just over 24 hours left before the summit-to-end-all-summits. But will they actually be able to agree on the big euro rescue plan? A letter sent last night by Jacek Rostowski, the Polish finance minister, makes it seem doubtful.
Since Poland currently holds the European Union’s rotating presidency, Rostowski is charged with convening a meeting of all 27 EU finance ministers tomorrow ahead of the big summit to lay the groundwork for a final agreement.
But officials tell Brussels Blog the so-called “Ecofin” council meeting is now likely off, and in a letter to Jean-Claude Juncker, the Luxembourg prime minister who chairs the group of 17 eurozone finance ministers, Rostowski makes it appear the cancellation is due to a failure to agree on outstanding issues. Read more
France and Germany may be divided over the key issues on the agenda of today’s European Union summit. But President Nicolas Sarkozy and Chancellor Angela Merkel have found common ground in the need to hammer Italy over its heavy debt load.
The leaders of the EU’s biggest and most powerful member states called in Silvio Berlusconi, the Italian prime minister, this morning for a pre-summit tongue-lashing. The message they delivered, according to one diplomat familiar with the discussion, was that Italy must deliver “specific and convincing reform measures soon.” They communicated a similar message to Berlusconi at a gathering on Saturday evening held by the centre-right European People’s Party.
Sarkozy also expressed his displeasure with Italy’s refusal to make way for a Frenchman on the European central bank’s executive board, according to the diplomat. France is due to lose its seat when Jean-Claude Trichet steps down as ECB president at the end of the month to be replaced by Mario Draghi, the outgoing president of the Bank of Italy. Berlusconi infuriated the French this week when he declined to free up a seat on the powerful decision-making committee by refusing to name current board member Lorenzo Bini Smaghi as Draghi’s replacement. Read more
French president Nicolas Sarkozy arrives at the summit this morning.
The big European Union summit will be divided in two parts today, with all 27 EU leaders meeting in the morning before the session is narrowed to the 17 members of the eurozone in the afternoon.
The Brussels Blog has obtained a copy of the 12-page draft of the morning gathering’s communiqué, circulated to summiteers this morning, and unless things change at the meeting, it looks like there will be no final decision on the one thing the 27 had hoped to finish today – a plan to recapitalise Europe’s banks.
The draft “welcomes progress made” by EU finance ministers during their 10-hour meeting on Saturday, but says the work will not be officially signed off until another meeting on Wednesday – the first official acknowledgement that leaders from all 27 EU countries (and not just the eurozone) will have to meet again next week. Whether that meeting will be the heads of all 27 governments or just their finance ministers remains to be seen. Read more